Last close As at 05/08/2026
GBP8.23
▲ 24.00 (3.00%)
Market capitalisation
GBP802m
Research: TMT
discoverIE has announced its first acquisition this fiscal year, buying Silver Telecom Limited (Silvertel), a designer and manufacturer of power-over-ethernet (PoE) solutions, for £21m in cash. UK-based but with an international customer base, the deal follows the group strategy to expand outside of Europe. On completion (expected by the end of H124), the deal should be immediately accretive to EPS and operating margins.
discoverIE |
Adding power-over-ethernet capability |
Acquisition |
Electrical components |
2 August 2023 |
Share price performance
Business description
Analyst
discoverIE is a research client of Edison Investment Research Limited |
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discoverIE has announced its first acquisition this fiscal year, buying Silver Telecom Limited (Silvertel), a designer and manufacturer of power-over-ethernet (PoE) solutions, for £21m in cash. UK-based but with an international customer base, the deal follows the group strategy to expand outside of Europe. On completion (expected by the end of H124), the deal should be immediately accretive to EPS and operating margins.
Year |
Revenue |
PBT* |
Diluted EPS* |
DPS |
P/E |
Yield |
03/22 |
379.2 |
37.6 |
29.4 |
10.80 |
27.6 |
1.3% |
03/23 |
448.9 |
46.3 |
35.2 |
11.45 |
23.1 |
1.4% |
03/24e |
457.3 |
46.9 |
35.3 |
12.00 |
23.0 |
1.5% |
03/25e |
472.1 |
48.9 |
36.4 |
12.50 |
22.3 |
1.5% |
Note: *PBT and EPS as per discoverIE’s underlying metric, excluding amortisation of acquired intangibles and exceptional items.
discoverIE has agreed to acquire Silvertel for £21m in cash on a debt-free, cash-free basis, funded from existing debt facilities, with an earn-out of up to £23m based on performance over the next four years. Based in Newport, South Wales, Silvertel was founded in 1997 and designs and manufactures power-over-ethernet modules and complementary products for the industrial connectivity market in more than 70 countries. The current CEO of Silvertel will shift to the chairman role and the current COO will become managing director of Silvertel. The business will sit in the Magnetics and Controls division. The deal requires approval under the UK National Security and Investment Act, which is expected to be received later this quarter (Q224).
In the year-ended February 2023, Silvertel generated revenue of £13.5m and PBT of £4.4m (32.6% margin); we understand this was an exceptional year for revenue driven by global supply chain disruption. Current year performance is expected to revert to closer to FY22 levels (revenue of £8.4m and PBT of £2.2m (26.2% margin)). The initial cost represents a price/CY PBT multiple of c 9.5x, within the range of previous high-margin acquisitions. We estimate that the deal would enhance diluted underlying EPS by c 0.5% in FY24 and 1.0% in FY25 and would expand underlying operating margins by 0.2pp to 11.9% and 12.0%, respectively. We maintain our forecasts pending closure of the deal.
At the end of FY23, discoverIE had a net debt/EBITDA ratio of 0.7x; on a pro forma basis, the deal takes this up to 1.0x, still well below the company’s target range of 1.5–2.0x.
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Research: TMT
Ahead of 4imprint’s interim results, scheduled for 9 August, the company has issued a half-year trading update indicating performance running well ahead of market expectations for the full year. This is in terms of volumes, gross margin, profitability and cash. The May AGM statement had also been very positive, but there was greater uncertainty at that time whether the buoyant conditions would persist and we held our forecasts. We have now lifted our revenue and earnings estimates for FY23 and FY24 and adjusted for the pension buy-in, announced in July. 4imprint is clearly outperforming its market and has plenty of scope to continue to build (profitable) share.