Solid State has acquired 2001 Electronic Components Limited (2K1) in a deal that closed on 31 December 2013. Valued at approximately £2.4 million, subject to the completion of a net asset value adjustment, this is the largest ever acquisition by the company and it is intended to strengthen its product offering and deliver substantial growth opportunities for the company.
Solid State is an AIM listed supplier of specialist industrial/ruggedised computers, electronic components, antennas, microwave systems and battery power solutions to the electronics market. The aquisition of 2K1 will strengthen its existing component distribution business and there is minimal overlap in product lines, suppliers or customers. The two companies’ multiple synergetic lines include LEDs, power supplies and displays.
Commenting on the announcement Solid State Supplies’ managing director, John Macmichael, said: “We have achieved annual compound growth of 22% over the last four years, far outstripping market growth. This acquisition will accelerate that trend and will enable us to extend our value-added business while offering customers a broader range of complementary products and technologies.”
Solid State’s acquisition of 2K1 was funded by an over-subscribed placing of 1,050,000 new Ordinary Shares with new investors at £2.42 per share. The Group reported a turnover of £31.5m for the year ended 31 March 2013, an operating profit margin of 6.2% before exceptional items of £0.1m, and a gross profit margin of 26.1% over the period.
For the year ended 31 December 2012, 2K1 reported turnover of £6.8m and a profit after tax of £59,000. In its management accounts to 30 September 2013 it had recorded turnover of £5.4m. One division of the 2K1 business, C1 Systems, is not being acquired. The Directors of Solid State plc expect that the acquisition of 2K1 will be earnings enhancing for the Group in FY 2014/2015.