Crane NXT (CXT) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of De La Rue Authentication Solutions accelerates strategy to lead in security and authentication technologies, expanding into identification documents, credentials, and brand protection markets.

• Complements OpSec's authentication and online brand protection solutions, enhancing technology capabilities and portfolio breadth.

• Provides access to the $3 billion authentication technologies market, which is growing at mid-single digits, and addresses rising counterfeiting and secure identity needs.

• Diversifies revenue streams, strengthens long-term relationships with governments and global brands, and reinforces trusted partnerships in nearly 80 countries.

• Aligns with M&A criteria: niche tech, high barriers to entry, and clear value creation path, supporting the goal to become a $3 billion company by 2028.

Financial terms and conditions

• Purchase price is £300 million (GBP 300 million), representing 13.7x fiscal 2024 Adjusted EBITDA, reducing to 9.5x after synergies; to be financed with cash on hand and existing banking facilities.

• De La Rue Authentication generated approximately $130 million in revenue for the fiscal year ended March 30, 2024, with an adjusted EBITDA margin of about 20%.

• Expected to be accretive to Adjusted EPS in the first full year post-closing and achieve double-digit ROIC by year five.

• Net leverage expected to be approximately 2x at close, with capacity for further capital deployment.

• No impact on 2024 financial results; closing anticipated in the first half of 2025, subject to customary closing conditions and business separation.

Synergies and expected cost savings

• Operational and productivity synergies estimated at around $8 million, primarily realized over the next three to four years.

• Synergies expected to reduce the deal multiple and drive double-digit ROIC by year five.

• Integration of digital and physical authentication technologies to enhance product offerings and profitability.

• Application of the Crane Business System (CBS) expected to improve margins and growth.

• Clear line of sight to commercial and operational synergies with OpSec.