Spirax-Sarco to buy US electrical products provider Chromalox for $415m

Chromalox serves a broad range of end markets with around 70% of sales being addressed via its direct salesforce, with the remainder going through distributors. Around two thirds of its sales are recurring revenue. It has five manufacturing facilities; three in North America, one in France and one in China.

In the year to the end of September 2017, the business - which derives around 18% of its sales from oil and gas end markets - generated revenues of $201m, earnings before interest, taxes and depreciation of $43m and earnings before interest and taxes of $37m.

The purchase consideration will be financed from new debt facilities supplied by Spirax's existing banks and Chromalox's executive team will remain with the business post acquisition.

Chief executive Nicholas Anderson said: "We are delighted to bring Chromalox, its management and employees into the Spirax-Sarco family. We have been following Chromalox for a number of years and believe that the acquisition represents an excellent opportunity to expand our addressable markets through the purchase of a clearly related business, which solves customers' specialist heating requirements, and that shares our strong direct sales business model.

"As we invest in strengthening the company's direct sales and leverage Spirax-Sarco's global footprint and expertise, Chromalox will enhance our growth and provide sustainable value creation for customers and shareholders."

Numis said the Chromalox acquisition is "another perfect fit" as it upgraded its stance on the stock to 'add' from 'hold'.

Meanwhile, N+1 Singer said it is "a very good deal for Spirax" and "an endorsement of the industrial recovery that we are seeing globally".

At 1010 BST, the shares were up 6.7% to 5,665p.