Bodycote spends $145m to further expand US footprint

The company said it is using existing credit facilities to buy: Lake City HT, based in Indiana, which is a medical market hot isostatic pressing (HIP) and vacuum heat treatment business serving the orthopaedic implant and civil aerospace industries; and Stack Metallurgical Group, based in the Pacific Northwest, which provides HIP, treat treatment and metal finishing services to the civil aerospace, defence and energy markets.

The investments will be made on a cash and debt-free basis, will come with tax benefits worth $15bn so the combined consideration is expected to be closer to $130m, which equates to less than nine times estimated operating profits for 2024. The businesses will be accretive to Bodycote's group margins and earnings from the first year after completion.

Bodycote also announced plants to open a new HIP plant serving the Space and Civil Aviation markets at one of its existing sites in greater Los Angeles, which is expected to become operational next year. The company said it will require "only modest investment".

"Optimal allocation of capital to drive shareholder value remains a top priority for the group and these investments reflect this," said chief executive Stephen Harris.

Bodycote's shares were up 1% in early deals on Monday at 615.05p.