Volex plc (LON: VLX), the global provider of integrated manufacturing services and power products, announced Tuesday it has completed the acquisitions of Prodamex SA de CV and Terminal & Cable TC following the obtention of the required regulatory approvals.
Prodamex and TC were acquired for a total cash consideration of C$22.5 million ($17.8 million). The acquisitions were funded by the company’s existing debt facilities.
TC’s facility in Quebec, Canada, provides Volex with robust wire harness manufacturing capabilities focused on the attractive “off-highway” market segment, supporting defense, industrial, agricultural and construction machinery customers.
Prodamex operates from a state-of-the-art manufacturing facility serving customers in Mexico, the United States and Canada. It brings Volex additional higher volume manufacturing capacity in central Mexico, complementing existing manufacturing plants in Tijuana and Juarez, providing customers with additional supply flexibility and production capacity.
Management Commentary
Volex executive chairman Nat Rothschild said, “The completion of the Prodamex and TC acquisitions increases our geographic coverage and technical capabilities in the key North American market. TC provides further expansion into defence markets following our recent acquisition of Irvine Electronics while Prodamex complements our strong, global proposition for domestic appliance manufacturers, giving us added scale and reach. The acquisitions support our strategy of developing Volex’s presence in attractive sectors where we can leverage our expertise and global reach to achieve profitable growth.”
Wall Street’s Take
Three months ago, HSBC analyst Michael Tyndall kept a Buy rating on VLX while raising its price target to 565.00p. This implies 68.2% upside potential.
Overall, VLX scores a Moderate Buy consensus rating among analysts based on two Buys. The average Volex plc price target of 532.50p implies 58.5% upside potential to current levels.
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