Australia’s Codan will pay over A$100 million (€65 million) to acquire US-based Domo Tactical Communications (DTC), reports in South Australia revealed in mid-February.
The Adelaide technology company has interests in communications, mining automation and metal detector manufacture and has been on a steep trajectory in the past 12 months, reporting a record profit of A$64 million in 2020. This result included record sales in its communications and metal detection divisions, totalling $348 million and established the company as one of South Australia’s fastest-growing concerns.
The latest acquisition will strengthen the company’s position in North America, and is in line with Codan’s strategic growth plan for its tactical communications business. The company will make an upfront payment of about $113 million ($US88 million) – fully funded from existing cash reserves – with a possible earn-out of up to $US16 million in additional payments if certain targets are achieved during 2021. In the first full year of Codan’s ownership, DTC is expected to contribute approximately $90 million in sales and $9 million in profit before tax.
The acquisition is on a cash-free, debt-free basis and is expected to complete by 30 April 2021, subject to US and UK regulatory conditions. Codan will acquire total assets approximately equal to the purchase price with no change to its shareholder equity. The acquisition will be fully funded from existing cash reserves.
DTC is an established technology provider for high bandwidth wireless communications with specialist capabilities to provide wireless transmission of video and other data applications to predominantly first world customers, including military and special forces, intelligence agencies, border control, first responders and broadcasters. The US company has additional locations in the UK and Denmark and employs around 140 staff.
Codan chief executive Donald McGurk said the acquisition will allow Codan to provide total communications solutions with the addition of video and data to traditional voice-only platforms. “This acquisition fills a technology gap and will be able to leverage Codan’s global distribution channels into the developing world […] DTC’s products are complementary to Codan’s tactical communications solutions and serve similar markets and customers. A number of key members of our tactical communications sales team have previously worked in the MIMO Mesh and surveillance markets, and therefore have significant experience in this industry segment,” he explained.