Spectris gobbles up Millbrook Group

Productivity-enhancing instrumentation and controls company Spectris announced on Friday that it has completed the acquisition of the entire share capital of Millbrook Group from Rutland Partners and Millbrook's management shareholders.

The FTSE 250 firm confirmed the purchase consideration totalled £122m on a debt and cash-free basis, which will be met from existing cash and bank facilities.

£3.4m will be deferred from the consideration for 24 months.

Spectris’ board said Millbrook is one of Europe's leading test, validation and engineering service providers primarily for the automotive and related markets such as tyres, petrochemical, defence and security.

“Established in 1968, Millbrook was sold by General Motors ("GM") to Rutland Partners and Management in 2013 and from that point it has been transformed from a GM dependent business to one with a broad base of UK and international clients and test and validation services,” the board said in a statement.

“Furthermore, in September 2015, Millbrook acquired Test World, a leading winter vehicle and tyre testing business within the Arctic Circle, based in Finland.

“Millbrook's services and capabilities allow customers to speed up their product design and launch processes and, in turn, improve their return on development investment,” it explained.

The business' UK test tracks and facilities are located on a wholly-owned 665 acre site in Millbrook, Bedfordshire that Spectris says has scope for further related commercial development.

Millbrook’s revenue in the year to December 2015 was £48m and earnings before interest, tax, depreciation and amortisation was £5.4m, with gross assets of £44.8m.

On a proforma basis, using the expected 2016 exit run-rate adjusted EBITDA, the consideration represents a 12-13x EBITDA multiple.

Beyond 2016, Spectris says the business has significant opportunities to accelerate its growth with a range of customers, and in key areas of testing, through further customer-supported investment in capabilities and facilities.

Millbrook will become a separate operating company within Spectris' Test and Measurement segment.

“Millbrook represents our largest purchase to date of a pure testing services business,” said Spectris chief executive John O'Higgins.

“It is closely related to our existing instrumentation businesses and, as such, the acquisition is an important step forward in the realisation of the group's strategy to provide our customers with differentiated solutions that incorporate a combination of hardware, software and services.”

O’Higgins said the combination of Millbrook's “service excellence” and the testing equipment and software in other Spectris operating companies will help customers address the “increasing complexities” involved in product testing whilst reducing the time to market for new products.

“We believe that there is a significant opportunity for Millbrook to strengthen its market position and accelerate its growth through continuing its recent capital investments and making bolt-on acquisitions to expand internationally and broaden its service portfolio.”