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Global analytical sciences company Trajan (ASX: TRJ) has announced it will acquire one of its long-term lab equipment components suppliers for $61.9 million today - a large sum representing around a fifth of the group's $302 million market capitalisation.
The buyout of US-based Chromatography Research Supplies (CRS) is the fourth acquisition made by founder-led Trajan since its mid-2021 listing with a mission to provide end-to-end analytics from manufacturing lab equipment all the way through to sampling and interaction with patients to preempt illness.
The Melbourne-based company will raise $29.7 million towards the deal in an equity placement at $2 per share, representing an 11.1 per cent discount from the closing price on 16 June.
The remainder of the funding will come from $20 million in debt financing via HSBC and $13.4 million in cash.
Under the agreement, TRJ will purchase the land and 1,900sqm facility where CRS operates in Kentucky, USA.
The transaction adds to other acquisitions including Germany-based lab automation business Axel Semrau GmbH, as well as two US companies - microsampling business Neoteryx LLC and LEAP PAL Parts and Consumables.
“The acquisition of CRS enhances multiple areas of our business and builds on our previous successful acquisitions to deliver comprehensive and best in class products in the analytical workflow,” Trajan CEO and managing director Stephen Tomisich said.
“Our market leadership in gas chromatography is enhanced with the addition of septa and ferrules components, as well as introducing a broader portfolio of products in other areas of the analytical workflow that build on our automation business.
“As with our previous acquisitions, we have partnered with CRS for many years, understand their business, and know precisely where they fit within Trajan. The acquisition is earnings accretive and able to be rapidly integrated.”
Founded in 1991, CRS manufacturers electronic and manual crimping tools, gas filters, ferrules, and injection port septa. The company developed a longstanding relationship with TRJ nine years ago, when the latter acquired SGE Analytical for an undisclosed sum.
CRS’ products, which are primarily used in analytical laboratories, are expected to deliver a revenue of US$14.1 million ($20.1 million) and an EBITDA of US$4.2 million ($6 million) for FY22.
Canaccord Genuity and Ord Minnett are joint lead managers and underwriters for the placement. DLA Piper is acting as legal advisor to TRJ.
TRJ said CRS’ revenue has grown by 20 per cent year-on-year and that the purchase would be earnings per share (EPS) accretive by roughly 31 per cent before synergies.
“Trajan has identified significant revenue and cost synergies as well as corporate savings realised from the date of acquisition and product line alignment, for total estimated annual synergy benefits of $1.3 million, expected to ramp up within the first 2–3 years of ownership,” Trajan said.
“Through the consolidation of current manufacturing facilities, Trajan can realise additional synergies over the medium to long term.”
In February, TRJ provided a full year revenue guidance of $104 million to $110 million and has now reaffirmed the figure despite changes in “many global macro-economic factors”. To mitigate the impact on performance, the company rolled out a price increase on products at the start of June.
TRJ also said it continues to have a strong demand for products, with the current order book for the capital equipment business at a record high.
The company is launching a share purchase plan on 24 June, allowing eligible shareholders to invest up to $30,000 for further strategic acquisitions and growth opportunities.
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