SDL to buy translation company Donnelley Financial Solutions

SDL has agreed to buy translation company Donnelley Financial Solutions for $77.5m (£60.1m) in cash.

The company, which provides services in language translation technology and content management, said the deal will be funded through the drawdown on new debt facilities and a proposed placing of up to 8.23m shares, representing 10% of the group. The shares will be placed at 440p each to raise gross proceeds of up to £36.2m.

In the year to 31 December 2017, SDL delivered around 5% revenue growth and generated revenues of $71.4m and adjusted earnings before interest, taxes, depreciation and amortisation of $5.8m.

The acquisition and placing are expected to be earnings-enhancing in the first full year of ownership, which is 31 December 2019.

Chief executive officer Adolfo Hernandez said: "The acquisition of DLS is aligned with SDL's strategy of focusing on 'premium' industries and regulated content. The combination of our businesses will strengthen SDL's market position in financial services and life sciences, which on a combined basis, account for approximately 30 % of the language services market. Together, we will be able to develop more differentiated industry-focused solutions by leveraging DLS' specialist services expertise and SDL's technologies. In addition, DLS brings us further skills and industry presence in Asian markets.

"Over time, DLS and SDL will seek to increase cross-selling across our customer bases and both businesses will be able to benefit from SDL's investments in machine translation, in-house linguists, 'Helix': our business process automation platform and administrative efficiencies, to drive margins towards our stated targets. We are delighted to welcome our new employees and customers to SDL."

At 1010 BST, the shares were up 3.5% to 459p.