10:24am Wednesday 20th January 2010
By Gareth Lewis
BULLET manufacturer The Allied Defense Group (ADG) is the latest foreign firm to succumb to the lure of acquisitive Hampshire defence firm Chemring.
The Virginia, USA, based manufacturer of medium and large calibre ammunition has agreed a £36m takeover deal with the Whiteley explosives specialist.
Soaring demand for military equipment in Afghanistan also helped Chemring post a huge rise in pre-tax profit, up 66 per cent to £95.8m in the year to November.
The deal for ADG is just the latest in an eye-catching string of audacious buy-up deals across the US that have transformed the company in the past two years.
Last September Chemring, the winner of the Daily Echo backed 2009 KPMG Company of the Year award bought US space technology group Hi- Shear Technology Corporation for £80m.
Earlier the firm had bought US mine detecting firm Niitek for £22m, another US ammunition maker Martin electronics for £35m and American space shuttle parts maker Scot for £20m.
The list continues with Norfolk based bomb diffusing experts Richmond Electronics & Engineering in an £11m deal and another bomb specialist in Poole’s BDL Systems for £9m.
Growth in its business combined with these acquisitions put a rocket under revenues, which spiralled upwards by 42 per cent to £503.9m for the year to the end of October.
The acquisition of ADG, which specialises in ammunition for armoured vehicles, brings Chemring a presence in the Middle East, a key step for a firm with a largely NATO focus.
David Price, chief executive of Chemring, said: “The acquisition of The Allied Defense Group will significantly enhance our business within the global ammunition and ammunitionrelated service markets. It provides a complementary range of products and manufacturing technologies, and increases the strength of our product engineering capabilities.
“The combined business will provide a strong platform for growth and create a world leader in these markets.”
Ken Scobie, Chemring group chairman, said: “It is very satisfactory to report another year of substantial growth in earnings, combined with excellent cash generation and a strong balance sheet. During 2009, three significant landmarks were reached – Group revenue exceeded £500 million; underlying profit before tax exceeded £100 million; and our market capitalisation increased to over £1 billion.”
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