| Eurotech acquires ADS for $41.5M to $54M |
Dec. 07, 2006
Italy-based embedded board and system vendor Eurotech continues its acquisitive spree, announcing the purchase of Applied Data Systems (ADS), a Maryland-based manufacturer of board- and system-level embedded computers, for $42.5 million. Eurotech says it will continue to scout out acquisition opportunities in the U.S., U.K., and continental Europe.
Eurotech acquired Parvus, a Utah-based board and embedded systems vendor, in 2003. It subsequently raised cash in 2005 through a public stock offering on the Italian stock exchange, and in the first quarter of 2006 acquired Arcom, another prominent embedded system and board vendor, for $26 million.
ADS, meanwhile, recently agreed to acquire a 65 percent share of China-based R&D company Chengdu Vantron Technology Ltd. (CVT). CVT employs about 30 engineers, and is focused on the development and manufacture of embedded computer devices.
Eurotech will purchase ADS for an "initial consideration" of $41.5 million in cash, followed by an additional "earnout" of up to $12.5 million, also to be paid in cash. The initial consideration equals 8.6x times ADS's 2006 EBITDA (earnings before tax, depreciation, and amortization), while the earnout represents seven times ADS's EBITDA for the calendar year 2007, less the initial consideration.
In the year ended Sept. 30, 2006, ADS earned $4.8 million before tax, depreciation, and amortization, on an unaudited turnover of $28 million.
Eurotech expects the deal to be "earnings enhancing" within the first year. ADS has demonstrated robust growth over the past five years, it says, by executing on a strategy to deliver complete embedded computing platforms that are ready for customers to deploy their applications on. ADS's products include "application-ready" boards and systems that typically run Linux or Windows CE, and feature the latest wireless technologies and graphics capabilities, Eurotech says.
Additionally, ADS has an extensive partner ecosystem said to include ARM, Intel, Marvell, Freescale, Cirrus, Microsoft (Embedded Windows CE), Arrow, Avnet, Sharp, Kyocera, Skelmir, and IBM/Dynapro. Its customer list reportedly includes Ricoh, Medtronic, Tyco, Philips, Voxware, Agilent Technology, and General Dynamics, while its market focus spans medical monitoring, fleet management, POS (point-of-sales/service), process control, digital signage, and gaming.
Eurotech CEO Roberto Siagri stated, "The enhanced product portfolio and wider international presence will improve Eurotech's global offering, particularly in the field of low power embedded technologies."
Siagri adds, "Eurotech has made no secret of its intention to acquire other businesses which offer a good strategic fit, in addition to growing organically. We continue to look for acquisition opportunities in the U.S., U.K., and continental Europe that support our strategic aim to build strength, size, and scale in our chosen markets."
Eurotech's stock rose about 4 percent today, to 9,265 lire per share (about $6.36). The company's stock is traded in the TechStar index fund of high-growth companies in Italy.
Information on specific recent design wins from Eurotech, ADS, Arcom, and Parvus can be found in the list of related stories below.
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