Senior to acquire Steico Industries amid slowdown in growth

High-tech components and systems manufacturer Senior has announced it will acquire precision tube and duct assembly manufacturer Steico Industries.

The FTSE 250-listed company announced the $90m (£59.2m) deal on Thursday.

The purchase includes the entire share capital of Steico Industries for a cash consideration of $75m (£49.3m) on a debt free, cash free basis.

It will also acquire Steico's trading facilities from Oceanside Industrial Properties for $15m (£9.9m).

Senior chief executive David Squires said it represents an important addition to the company’s aerospace division.

“[It is] broadening our product offering and enabling Senior to respond to our customers' desire for us to offer more complete fluid systems work packages,” he said.

“The joint capabilities of the two companies combined with Senior's wider market access and financial strength, are expected to further enhance the future growth prospects for Senior's aerospace division."

The acquisition will be funded using the group's existing borrowing facilities, including the recent US loan notes placement, and is expected to be completed next month.

Senior also updated the market with a mixed bag of results from July to October in a trading update.

Activity in the aerospace division’s commercial aircraft market had increased, with Boeing and Airbus delivering a combined 448 aircraft, up 2% from 2014.

However there have been reduced levels of activity in the regional, business jet and commercial helicopter markets.

The division’s margins have also been impacted due to temporary activities to protect customer schedules as well as continuing declines in income from machined waste aluminium.

Growth in the Flexonics division’s North American heavy truck production also slowed and demand for agricultural and mining vehicles continues to be weak.

As a result, Senior said it believes full year adjusted profit before tax will now be around the lower end of current market expectations.