Last close As at 05/08/2026
GBP1.85
▲ −7.00 (−3.65%)
Market capitalisation
GBP105m
Research: Industrials
Solid State has acquired Willow Technologies, a manufacturer and value-added distributor of electromechanical products. The initial consideration payable is c £5.5m cash (net), financed from existing resources. Broker consensus FY22 EPS has been raised by 9% to reflect the earnings enhancement in the first full year.
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Solid State |
Acquisition of Willow Technologies
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Technology |
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3 March 2021 |
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Solid State has acquired Willow Technologies, a manufacturer and value-added distributor of electromechanical products. The initial consideration payable is c £5.5m cash (net), financed from existing resources. Broker consensus FY22 EPS has been raised by 9% to reflect the earnings enhancement in the first full year.
Acquisition complements value-added distribution
The acquisition complements Solid State’s existing value-added distribution activity, adding the Durakool range of own-brand electromechanical relays and contactors and the Hermaseal range of own-brand glass to metal seals and third-party electromechanical components. It significantly enhances Solid State’s Value-Added Supplies division's offering for electric vehicles, EV charging, green tech, medical and military markets. As over 70% of Willow Technologies' revenues are derived outside the United Kingdom, the acquisition supports the group's strategic objective of increasing geographic reach and gives an established platform in the United States, strengthening the group's presence in the region.
Deal is earnings enhancing in first full year
For the year ended March 2020 (FY20) Willow Technologies reported revenue of £10.3m and profit after tax of £0.45m. Net assets at the year-end totalled £7.0m. The company’s performance in H121 was adversely affected by the coronavirus pandemic, so management took appropriate action to control costs. Both orders and billings have since recovered, so management expects FY21 revenues will be c £8.75m, generating c £0.6m underlying profit after tax. Solid State expects the acquisition will be earnings enhancing in the first full year. The initial consideration of £5.5m (net of acquired cash) is 9.2x FY21e net earnings. It is payable in cash, with an additional deferred element dependent on achieving at least £0.7m profit over the next 12 months of up to £3.5m and will be financed from the group’s existing cash resources and banking facilities.
Valuation: Trading at a discount to peers
Solid State’s shares have fully recovered from the pandemic-induced sell-off in March 2020 and are now at the highest level they have been for five years. They are trading on a year 2 P/E multiple at a small discount to the mean for our sample of specialist manufacturing companies (14.5x for Solid State versus 16.2x for peers) and a much larger discount to the mean for our sample of value-added distributors (14.5x versus 28.6x).
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Consensus estimates
Source: Company data, broker consensus. Note: *Adjusted for exceptionals, share-based payments and amortisation of acquisition intangibles. |
Solid State is a research client of Edison Investment Research Limited
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Research: Investment Companies
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