London-listed Spectris is significantly increasing its exposure to “green metals” via its US$260 million acquisition of 11-year-old US technology company, SciAps.
The deal, which sees Spectris paying $200m upfront and $60m deferred, brings Boston-based SciAps and its handheld X-ray fluorescence (XRF) and laser induced breakdown spectroscopy (LIBS) analytical instruments into Spectris’ Malvern Panalytical business.
“SciAps instruments identify compounds, minerals and elements in materials in major industries and high-growth end markets including those relevant to the circular economy and energy transition such as mining, metal recycling, battery materials, rare earth metals, manufacturing, food and agriculture,” Spectris said.
SciAps is forecast to generate EBITDA of $12.1m on sales of about $70m in the 12 months to December 31 this year for five-year revenue CAGR of circa-30%.
With c$6m of synergies expected from the union, Spectris calculates a c14x EV/EBITDA multiple, “with sustained future growth expected to be significantly ahead of our financial framework of 6-7%”.
“Materials” business line sales of £142m in Spectris’ FY2023 (to the end of December) were about 10% of the group total.
Spectris reported FY2023 sales of £1.45 billion were up 9% year-on-year. The US is its biggest market, followed by China.
CEO Andrew Heath said in February this year Spectris was “a very different business than it was five years ago”.
“We have carefully and systematically refocused the group around premium precision measurement businesses with attractive financial characteristics and long-term sustainable growth prospects, where we are solving some of our customers’ toughest challenges,” he said.
“Spectris Scientific is focused on the high-growth end markets of life sciences, material sciences, semiconductors and academia, that are benefiting from a number of structural growth trends.”
Among key structural growth tailwinds: minerals for the energy transition, lower carbon building materials and increased recycling. The company saw “particularly strong growth [in primary materials] in Asia predominantly driven by mining and minerals” in 2023.
Medium term growth of 5-6% for materials-related sales would be driven by “green metals and mining critical minerals for the energy transition”, batteries and power electronics, and advanced manufacturing infrastructure.
Increased adoption of new automation and digitisation technologies in mining and metals was fuelling demand for digitally connected instruments and remote monitoring and analytics, Spectris said.
The company has completed 12 acquisitions since 2019; four in 2023.
The significant SciAps deal added a “proven, high-growth business with sales growth significantly above the market”, Spectris said.
The “highly synergistic combination” of SciAps handheld field instruments and Malvern Panalytical’s laboratory and benchtop equipment created a “comprehensive suite of technology offerings in attractive end markets including green metals and mining, recycling, batteries, pharmaceuticals and agriculture”.
Heath said SciAps would help accelerate Malvern Panalytical’s digital strategy and move analysis “closer to the sample” for near real-time evaluation and decision making.
“Value enhancing M&A is central to our compounding growth strategy,” he said.
The SciAps acquisition was expected to be earnings accretive in the first year.
The deal would be funded from Spectris’ c$500m of cash on hand at the end of May.
Spectris shares were up more than 5% this week, valuing the company at c£2.95 billion (US$3.78 billion).
