The deal, which was completed today (3 March), accelerates Cambridge-headquartered inkjet developer Xaar’s growth strategy of offering its customers, particularly User Developer Integrators (UDIs), “greater integration across inkjet solutions through access to more of the printing ecosystem, such as ink supply systems and electronics”.
Megnajet designs and manufactures a range of integrated and compact ink management and supply systems. Xaar said the Megnajet offering will form part of its inkjet solutions portfolio, helping UDI customers reduce development timescales and shorten time to market, while also attracting a broader range of commercial opportunities for the business.
The acquisition will also enable Megnajet to focus on growth through new developments and shared expertise across the group.
Megnajet employs 14 staff, all of whom will remain with the business, and it will be headed by Mike Seal as its new general manager. Seal was previously Xaar’s head of advanced applications.
Megnajet’s technical director Graham Strudwick will become the Xaar Group’s new director of system component integration, enabling him to share his expertise with the wider business while retaining the responsibilities from his previous role.
Xaar CEO John Mills said: “This acquisition demonstrates further progress of our growth strategy as we focus on offering our customers a more integrated inkjet solution.
“As well as enhancing Xaar’s world class inkjet expertise, Megnajet’s excellent reputation within the inkjet industry for delivering compact and easy to integrate products will ensure we can attract new opportunities through providing a more rounded approach for our customers.
“Xaar has worked with Megnajet for several years, so this acquisition is a great addition to our business. We are delighted to welcome everyone at Megnajet into the Xaar Group.”
Strudwick added: “This is an exciting opportunity for Megnajet and will ensure the company continues to develop and grow. Xaar has a great track record for innovation and leadership within the inkjet industry. We’re delighted to become part of the Xaar team.”
Following the completion of the acquisition, it is intended that the businesses of Megnajet and Technomation will be merged and the combined business will continue trading under the Megnajet name.
The initial payment for the acquisitions of Megnajet and Technomation is £1.8m each, with an additional £200,000 deferred consideration to be paid in two years' time, also for both, meaning in total the deal is worth around £4m.
The combined initial consideration and deferred consideration for the acquisition is being funded from Xaar's existing resources. Megnajet and Technomation are both being acquired on a cash free, debt free, and normalised working capital basis.
Amounts will be adjusted up or down following completion, subject to completion accounts within 60 days, and will be satisfied in cash.
For the year ended 28 February 2021, Megnajet generated a pre-tax profit of £300,000 and had unaudited gross assets of £1.3m. For the year ended 31 January 2021, Technomation generated a pre-tax profit of £400,000 and had unaudited gross assets of £600,000.
The Xaar board expects the acquisition to contribute an annualised revenue of approximately £3m and to be earnings accretive in the current financial year ending 31 December 2022.
