Trading highlights
The acquisition is in line with the Group's strategy and the development strategy of IMI's Precision Fluid Technology Division.
Bimba's market-leading distribution channels, combined with IMI's complementary and minimally overlapping product lineup, will nearly double IMI Precision Fluid Technologies' industrial automation business in the United States.
The plan is to gradually improve Bimba's margins to levels close to those of IMI's Precision Fluid Technology Division.
The acquisition is expected to boost earnings in the first year, with return on capital expected to exceed IMI's capital investment within three years.
The acquisition aligns perfectly with IMI's strategy of increasing revenue in the United States and expanding IMI's precision fluid technology business in the core industrial automation market. Bimba's brand awareness and market-leading distribution network can accelerate the growth of IMI's Precision Fluid Technology division in North America. At the same time, IMI's operational excellence program will enable Bimba to significantly improve its margins and gradually approach IMI's level of profitability with precision fluid technology.
The deal is for $198m (£148m) in bank cash. In addition, IMI has set aside $2.5 million for employee retention. Completion of the acquisition is subject to approval of the merger and Bimba's Employee Stock Ownership Plan (the "ESOP"), which is expected to close in early 2018. The acquisition is expected to boost earnings in the first year, with return on capital expected to exceed IMI's capital investment within three years.
Bimba Overview
Bimba, founded in 1957, manufactures a range of high-end cylinders and related products for the industrial automation market. Bimba has a good blue chip customer base, a large dealer network and a significant user base. Headquartered in Chicago, Illinois, the company has nine operations, including seven in the United States, one in Mexico and one sales office in the Netherlands. Bimba, which makes most of its revenue in the United States, has 500 permanent employees. Patrick Ormsby is Bimba's long-time President and all of his roles will remain unchanged after the acquisition.
Bimba reported revenue of $109 million and adjusted EBITDA of $13.3 million in 2016, including a $1.5 million pro forma adjustment for plant and operational improvement resources. Bimba is expected to grow in 2017 in line with IMI Precision Fluid Technologies' North American business, with unaudited revenue of $120 million and adjusted EBITDA of $16 million, also including a $1.5 million adjustment for additional operational improvement resources.
A compelling strategic combination
The merger extends the breadth and depth of the two companies' existing product line-up, with minimal product overlap between Bimba's complementary cylinders and IMI's precision fluid Technology valves and air handling equipment. The combined team's priorities will be to unify the two brands' market presentation and establish a platform to accelerate the expansion of commercial and dealer opportunities arising from the merger.
In addition to the business benefits, IMI's industry-renowned operational improvement process will also be implemented in Bimba manufacturing, creating more important opportunities. Upon completion of the acquisition, a 12-month improvement program will be implemented to prepare the company for accelerated growth, followed by three years of synergies and improved performance. The synergy is expected to achieve approximately 7% of operating revenue.
Mr. Mark Selway, CEO of IMI, commented on the acquisition:
"Bimba is a great company and perfectly aligned with IMI's strategic goals. We are delighted to welcome all Bimba employees to the IMI Group. Bimba will significantly increase the market share of IMI precision fluid technology in industrial automation in the United States. The expanded product lineup will enhance our competitiveness, and Bimba's extensive dealer network will greatly improve IMI's penetration of precision fluid technology in the US market. We are excited about the future and look forward to working with the Bimba team."