Bridgepoint's EMT to acquire Exova for £620m

The acquirer has won a competitive process in which PAI Partners and investment firm Jacobs Holding also submitted bids. Bridgepoint has received irrevocable undertakings to vote in favour of the proposed deal from shareholders with a total of 55.47% of Exova's ordinary share capital.

Exova's valuation equates to 12.5x the company's adjusted EBITDA for the 12 months to December 2016, according to a statement issued by the Exova board of directors.

It values Exova's shares at 240 pence apiece, with shareholders entitled to an additional dividend of 2.35 pence per share for the period ending December 2016. The price is a 26% premium on Exova's average 192.37 pence share price over the 12-month period to 24 March 2017.

Since CD&R's initial investment in the company, Exova has undertaken an acquisitive strategy. In 2013, it acquired US vehicle testing company Defiance and Czech-based calibration services provider GSMobile. In January 2014, it added UK-based stack emissions testing specialist Catalyst.

Bridgepoint acquired EMT in a secondary buyout from 3i in December 2015. 3i reaped £186m and a 3.9x return from the sale, which brought to an end a five-year holding period.

EMT's acquisition of Exova is expected to complete in the third quarter of 2017.

Debt
HSBC, HSBC Securities, Bank of America, Bank of America Merrill Lynch International, ING Bank and Barclays Bank have underwritten a debt package to support the deal.

Previous funding
CD&R acquired Exova – then Bodycote Testing Group – in August 2008, according to unquote" data. The initial deal valued the company at approximately £417m, with capital drawn from CD&R Fund VII.

Exova listed on the London Stock Exchange with a market cap of £550m in April 2014, with CD&R retaining a majority stake following the IPO. The flotation raised £220m from 100 million shares priced at 220 pence apiece, with the company receiving proceeds of £110m.

Company
Edinburgh-headquartered Exova is a laboratory testing company with a particular focus on the aerospace, energy, oil & gas, civil engineering, transportation, pharmaceutical, food, consumer products and medical devices industries.

The company operates 135 laboratories across 33 countries, up from the 117 it operated at the time of its 2014 IPO. According to publicly available records, the company generated revenues of £328m in 2016, up 11% on the previous year, with EBITDA of £50.3m, up 8%.

People
Exova – Allister Langlands (chairperson).
Element Materials Technology – Charles Noall (CEO).

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