Business
Strategic acquisition in European Fluid Power
Strategic acquisition in European Fluid Power.
About this update from Diploma Plc
[{"type":"text","content":"\n\nTHIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION\n \n13 July 2023\nDiploma PLC\nStrategic acquisition of European Fluid Power platform\n \nDiploma PLC, the value-add distribution group, is pleased to announce the acquisition of Distribuidora Internacional Carmen SAU (\"DICSA\"), a market-leading distributor of fluid power solutions into the European aftermarket for an initial consideration of ca. £170m (€200m).\n· A high quality business: DICSA has significant customer value-add based on quality product, breadth of range, technical service, and speed to market. This customer proposition has driven a long track record of double-digit organic growth at attractive margins. \n· Strong strategic fit: the acquisition adds to our established positions in the US and UK, expanding our aftermarket fluid power capability and accessing key strategic markets in Continental Europe. DICSA is based in Spain with good exposure across Europe, particularly France and Germany. With small market shares in these significant economies, the differentiated proposition can continue to drive strong growth.\n· Attractive valuation: the initial consideration of £170m represents a multiple of 9x 2023 EBITDA. The acquisition will be earnings enhancing and exceed cost of capital from day one, and the business will be accretive to the Group's organic growth and margins. There are also material revenue and cost synergies with our existing fluid power businesses in the UK and US, accelerating the journey to 20% returns over the next three to five years. \n \nHigh quality fluid power aftermarket business in Continental Europe\nThe acquisition of DICSA builds on Diploma's established track record of driving future organic growth through acquisitions at excellent returns and fulfils the key characteristics we seek:\n· Fluid power product capability: DICSA is a value-add distributor of a diverse range of hydraulic hoses, fittings and components, a product set with which we are familiar, and similar to that offered by our UK Aftermarket Seals business, R&G.\n· Attractive aftermarket business: this is a model we like which, together with a highly diversified customer base, has underpin...