Vehicle inspection specialist Opus continues its impressive growth path. This morning, the company announced that it has signed a share purchase agreement to acquire Drew Technologies Inc, a leading manufacturer of vehicle communication analysis and diagnostic equipment for the vehicle inspection and automotive service industry. Not only does the acquisition add valuable technology to Opus’ offer, it also increases the company’s US exposure which was at around 60% before the acquisition.
The purchase price is USD 30 million (approximately SEK 254 million) plus a contingent earn-out of 4.4 million (approximately SEK 37 million). The transaction is expected to close within the next 30 days. The acquisition includes a cash balance of approximately USD 400,000 (approximately SEK 3.4 million). Hence, the acquired business excluding cash is valued at approximately USD 29.6 million (approximately SEK 250 million). After the acquisition, Drew Tech will become a subsidiary of Opus Inspection. However, the company will continue to operate as a stand-alone legal entity with the current management in place.
Drew Tech is a leading manufacturer of On Board Diagnostic (OBD) equipment for the vehicle inspection industry and for the OEM automotive industry. Drew Tech offers tools for vehicle development, end-of-line testing, vehicle diagnostics and vehicle inspection programs. In 2014, Drew Tech had revenues of approximately USD 13 million (approximately SEK 110 million) with EBITDA of USD 5.4 million (approximately SEK 46 million). In 2014, Drew Tech had sales to Opus Inspection of approximately USD 2.2 million (approximately SEK 19 million). Excluding the sales to Opus inspection, Drew Tech adds some 6% to Opus 2014 revenues.
The transaction is financed through USD 25 million (approximately SEK 211 million) in cash, USD 5 million (approximately SEK 42 million) in a directed issue in kind to the sellers of Drew Tech and USD 4.4 million (approximately SEK 37 million) in earn-out over five years. The transaction is expected to contribute to net profit per share for Opus Group beginning in March 2015.
“We are excited about the acquisition of Drew Tech, a leading technology company focused on vehicle communication. The company has a leading position in the OBD scan tool and data logger market and a bright future ahead of itself. Drew Tech will continue to operate stand alone and focus on its strong customer relationships. Short and mid-term we see a great strategic fit between both Drew Tech and Opus Inspection as vehicle communication will become a significant portion of vehicle inspection programs ” said Lothar Geilen, CEO of Opus Inspection. “Their technical expertise in OBD technology is the companys leading strength. I especially want to express a warm welcome to the Drew Tech employees, who have been instrumental in the companys ongoing success.”
Background and reasons for the Acquisition:
Drew Tech, founded in 1996 and headquartered in Ann Arbor, Michigan, USA, has developed into a leading supplier of OBD equipment for vehicle communication analysis and diagnostics systems for automobile manufacturers, workshops, automotive dealerships and inspection stations worldwide. All product development, design and final production take place in Ann Arbor. The company is at the forefront with its latest OBD technology that is used to inspect vehicles for both emission and safety vehicle inspection. The acquisition means that Opus Inspection controls market leading OBD technology it intends to use in several markets. This technology is of great importance for the future global product and service offering of Opus Inspection, including in the U.S. vehicle inspection markets.
In connection with the acquisition Opus also announces a rights issue to existing shareholders of approximately SEK 150 million before transaction costs. The proceeds will be used to strengthen Opus Groups balance sheet in conjunction with the acquisition of Drew Technologies and to finance the company’s continued expansion. The rights issue is subject to approval by Extraordinary General Meeting (EGM) on March 10, 2015. The subscription price and offer ratio intends to be decided no later than March 4, 2015 and announced no later than March 5, 2015 at the latest. The subscription period will run from and including March 17, 2015 up to and including March 31, 2015