Legend Corporation (ASX:LGD) has reached agreement to acquire selected assets of the Australian operations of System Control Engineering, and the shares of New Zealand based System Control Engineering.
This is a strategic acquisition that significantly enhances Legend’s value chain with a range of quality industrial products and project capabilities.
SCE forecast revenue for the year ended 30 June 2015 will be $28.5 million with Earnings before Interest and Taxation of $1.85 million, unaudited.
Net tangible assets at completion will be around $8.7 million.
Legend will acquire SCE for $10.2 million by way of an initial payment of $9.2 million upon completion with the remaining $1 million payable 31 December 2015.
The vendors will remain with the business and can achieve a total in deferred payments of up to $7.7 million based on the EBIT results for the financial years ended 30 June 2016 through 30 June 2019.
SCE will operate as a distinct division of Legend, and the effective acquisition date is back dated to 1 May 2015.
SCE has history and expertise in the supply of industrial and commercial gas, heating, refrigeration, electrical and air conditioning components, appliance spares and related value added systems to contractors and resellers.
The acquisition will be funded through existing debt facilities and working capital and it is expected that the acquisition will be earnings per share and operating cash flow positive in the first year.
Legend is currently capitalised at around $50 million.
