Cadre (CDRE) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Carr's Engineering Division for £75 million expands presence in nuclear safety, medicine, fusion, and automation, deepening exposure to international customers and new sub-verticals.

• Adds five niche brands with manufacturing in the US, UK, and Germany, broadening product offerings and geographic reach.

• Complements existing nuclear platform, addressing critical assets for waste management, defense, decommissioning, and medical fields.

• Brands acquired have high cost of substitution, defensible technology, and resiliency through market cycles.

• The transaction more than doubles global scale and allows servicing multiple product categories for each customer.

Financial terms and conditions

• Enterprise value of £75 million, payable in cash at completion, funded through available cash and credit facility.

• Engineering Division generated approximately £51 million ($62 million) in revenue for the fiscal year ended August 31, 2024, with EBITDA margin at the lower bound of the acquirer's operating model.

• The order book stood at £54 million as of August 31, 2024, with ~80% of FY25 revenue underpinned by long-term contracts.

• No significant change to CapEx profile; target remains 2% of revenue.

Synergies and expected cost savings

• Opportunity to expand EBITDA margins from mid-teens by applying the operating model, focusing on pricing, operational efficiency, and productivity tools.

• Commercial synergies expected from complementary product portfolios and expanded manufacturing bases in the U.S., U.K., and Germany.

• Integration of pricing strategies and quoting processes to align with premium, highly engineered solutions.

• Anticipates additional growth through select future acquisitions aligned with key criteria.