Light Science Technologies Holdings PLC (AIM:LST) said it has agreed to acquire the business and assets of Injecta Fire Barrier (IFB) in a deferred profit-sharing deal, with no upfront or fixed capital outlay, from CEO Simon Deacon.
This means that the acquisition should quickly generate cash and allow the group to be self-financing “from day one”.
IFB has developed a fire-resistant graphite barrier system, Injectaclad, which expands when heated and is used to contain the spread of fire and smoke within building compartments and can be quickly installed on buildings to enable them to comply with new government fire safety regulations.
It has reportedly completed two projects to date, generating around £790,000 in sales and currently has a forward order book worth around £600,000, with a pipeline of potential sales opportunities of a worth around £7 million.
LSTH will acquire IFB from Deacon’s Fire Barrier International Ltd on a deferred contingent consideration basis of up to £1.75 million over a five-year payment term.
The contingent consideration is calculated monthly at 50% of net profit after tax, excluding intra-group charges and non-cash accounting adjustments linked to acquisitions. The consideration is payable 30 days after the end of the month to which it relates, subject to a withholding in proportion to the unpaid commercial debt amounts.
The AIM-listed company said the rationale for the acquisition is in line with its plans to create a “self-funded, cash-backed group, positioned to capitalize on clear opportunities across all of its target sectors as it develops. that the time will have come.” right”, and that there are synergies with its Contract Electronic Manufacturing division, which has strong relationships in the fire protection market.
He highlighted the Government’s call for urgent action to make buildings safer across the UK and the creation of a £5 billion building safety fund to replace unsafe existing cladding in thousands of hotels, student accommodation, apartments, hospitals and government buildings.
Deacon said: “We believe that with our industry knowledge and installation teams across the group, this new division, in a growing market with high demand, solves an important problem quickly and cost-effectively – and , more importantly, ensures the safety of people.
“The cash-generating nature of the business will be valuable as we grow, and the synergies with existing operations make it an ideal fit as part of our managed expansion.” We are excited about the continued opportunities within the CEM and CEA divisions and, given broader government legislation and the need for protection solutions, we believe IFB will be a strong addition that will pay for itself from day one.