Niche Dunedin engineering and robotics company Scott Technology Ltd (NZX: SCT) has purchased a Belgian warehouse automation company for €12.1 million ($NZ20.3 M) cash, with plans to expand across the world.
When reporting a strong full year result last October, Scott Technology iterated it remained on the acquisition trail; being debt-free and cash-rich.
The company started its current financial year with a record $80 M order book and $26 M cash in hand; underpinned by Brazilian food giant JBS having taken a controlling 50.1% stake in the company in April 2016, for more than $40 M.
Scott chairman Stuart McLauchlan said the purchase of Belgian-based Alvey Group, with 250 staff across Belgium, the Czech Republic, France and the UK, would accelerate its access into international markets.
The acquisition was made from cash in hand, with the target purchase date April 4, he said.
“This is a key development that adds to our overall automation capabilities, while helping fulfil our strategic expansion goal, and accelerating our access to international markets,” he said.
Alvey specialises in tailor-made industrial automation systems, including packaging of part-finished or finished products, using palletisers, conveyors and stacker cranes, plus it has its own warehousing software package.
Alvey's current owners, including its managing director, would stay with the company and had an earn-out clause in the purchase, McLauchlan said.
While the Alvey purchase gave Scott access skills and technology faster than could be developed in-house, Scott could expand Alvey operations into Germany, the US, New Zealand, Australia and China.
“Here (NZ) there's meatworks and warehousing; any back-end operations which need automation,'' he said.
Staff would not be seconded to Belgium, Alvey would come under Scott's German-based operations team.
Alvey's revenue to March was $56.5 M, or 42% of Scott's revenue for the same period, meaning Alvey would contribute positively toward Scott's revenues this financial year.
Previous acquisitions during the past decade have exposed Scott to a wide range of niche sectors.
They include superconductor magnetic motors, specialist assay sampling machines for the mining sector, new bandsaw safety technology, robotic automation and robot refurbishment, and a 2016 purchase of a German appliance line manufacturer and precision metal parts stamping.
McLauchlan said Alvey was one of more than 30 potential acquisitions under consideration. While about 75% of the present cash on hand had been spent, he did not rule an end to future acquisitions.
“We've used a good part of the cash, but we're always keeping an eye out for other acquisitions,” McLauchlan said.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.