Chemring buys bio threat detection firm

20th Apr 2011 11:53

Military decoy flare and mine detection firm Chemring has agreed to acquire the Detection Systems operations and certain related assets of General Dynamics Armament, a subsidiary of US based General Dynamics Corporation.The total cash consideration of £55.2m will be paid on completion of the deal.Chemring said it is acquiring a US leader in chemical and biological threat detection which has an advanced capability in stand-off detection of Improvised Explosive Devices (IEDs).To fund the acquisition the company is raising £112.3m (gross) through a placing of 17.41m new ordinary shares at 645p each. The money left over will remain in the company war chest ready to take advantage of future opportunities.The shares being issued pursuant to the placing represent around 9.8% of the existing issued share capital of Chemring.In the twelve months to 31 December 2010, Detection Systems reported an unaudited profit before tax of £5.1m, the same as in 2009, on turnover of £37.7m, which actually fell from the previous year's £42.8m. The order book at 31 March 2011 was £38.0m, £28.2m of which is expected to be delivered during 2011. The gross assets of Detection Systems at 31 December 2010 were £14.1m. Chemring believes that the acquisition creates substantial opportunities, by enhancing its existing IED detection capabilities and through growth within Detection Systems' chemical and biological detection programmes.The acquisition is expected to be earnings accretive in the 12 months to 31 October 2012. The completion of the transaction is conditional on, inter alia, certain US regulatory approvals which are anticipated in around sixty days. ab