Chemring, the military equipment maker, is to pay £55m to acquire a German-owned company that specialises in devices designed to prevent road-side bomb attacks on western military forces in Afghanistan.
The cash deal will see Chemring, best known as a supplier of ejector seats and pyrotechnic decoys for military aircraft, take control of Roke Manor Research, a subsidiary of Siemens of Germany which is based in Hampshire.
The acquisition comes as British and other coalition forces are struggling to stem casualties from improvised explosive devices (IEDs) in Afghanistan.
Roke, which employs 450 staff including 300 specialist engineers and generated revenues of £45.3m in the year to September 2009, has developed counter-IED systems and other products including systems used in military drones and secure communication networks.
The purchase, to be funded through existing bank facilities, extends Chemring’s interest in the counter-IED arena. In 2007 it paid £11m for Richmond Electronics and Engineering, which makes robots used in the disarming or detonation of bombs as well as blast-resistant clothing used by bomb disposal officers. In 2008, Chemring also paid $40m to acquire Niitek, a US-based developer of landmine detection systems.
David Price, chief executive of Chemring, said a switch in focus from mobile communications towards military applications at Roke prompted Siemens to run an auction for the business that had become “non-core”.
Roke, originally acquired by the German group after the takeover of Plessey by Siemens and GEC in 1990, generated underlying profits of £3.5m last year, had gross assets of £40.7m and enjoys an order book of £37.2m. It would continue to provide third-party development and production services to military and industrial customers, added Mr Price.
The deal is the latest bolt-on acquisition by Chemring, which in June reported improved interim turnover, from £233.5m to £255.9m, and a 7 per cent rise in underlying profits in spite of wider concerns about cuts in defence spending by western powers.
Shares in Chemring, up 39 per cent on the year, fell 74p to £28.06 on Tuesday.