Standex International Corporation and Torotel, Inc., announced that they have entered into a definitive agreement for Standex to acquire Torotel for approximately $48 million in cash, which includes the assumption of net debt of approximately $1.4 million.
The transaction is expected to close in the first calendar quarter of 2020 and is subject to customary closing conditions and regulatory approvals, including the approval of Torotel shareholders. Standex expects the acquisition to be slightly accretive to its earnings in its first year of ownership excluding one-time purchase accounting and transaction costs.
“Torotel is a strong strategic fit with highly complementary capabilities to our existing high reliability magnetics portfolio, further adding significant technical and application expertise as well as strengthening our value proposition with industry leading customers,” commented Standex President and Chief Executive Officer David Dunbar.
Torotel specializes in the custom design, manufacture and sale of a wide variety of precision magnetic components including electro-mechanical assemblies, high voltage transformers, dry-type transformers, toroidal coils, inductors reactors and chokes for use in equipment such as aircraft navigational equipment, digital control devices, medical equipment, avionics equipment, down-hole drilling, conventional missile guidance systems, and other defense and commercial aerospace applications.
Herb Sizemore, Chairman, President and CEO of Torotel, stated, “We are excited to join a global leader like Standex with a similar culture and execution focus to our own. We see this as a great opportunity for our employees and customers. The acquisition will allow us to leverage our shared expertise, manufacturing know-how and solid customer relationships. As a result, we expect to be able to compete more effectively, particularly in the aerospace and defense sectors.”
“Torotel’s customized and highly-engineered solutions are very well-positioned in the aerospace and defense sectors, particularly for new platforms that are in the early stages of ramping. These end markets are characterized by large and growing addressable markets with long-term contracts based on strong engineer-to-engineer relationships and demanding technical standards, requiring close partnership with suppliers,” continued Mr. Dunbar.
“Standex has a very focused and methodical approach to integrating acquisitions and realizing commercial opportunities that we have successfully demonstrated in prior transactions. As a result, we believe that we will create significant value from this acquisition for our customers and shareholders as we further transform Standex into a more focused industrial company with significant runway for higher growth and profitability. We look forward to welcoming the Torotel team and employees to our company,” concluded Dunbar.
Founded in 1956, Torotel, Inc. is a leading designer and manufacturer of custom magnetics products primarily for the aerospace and defense industries. Torotel’s trailing twelve-month revenues are approximately $24 million. Torotel, which has 174 employees, is headquartered in Olathe, Kansas and has operating facilities in Olathe and Hatfield, Pennsylvania.