Cohort plc announced on 12 December it has agreed to acquire Wärtsilä ELAC Nautik GmbH, a Germany-based developer of surface and submarine sonar systems with annual revenues of approx. €21 million. The agreed headline price of the acquisition is €11.25 million and the parties envisage completion of the acquisition on or before 30 June 2020, subject to customary closing conditions and German government approval.
ELAC, based in Kiel, founded in 1924 and employing around 120 people, will become Cohort’s sixth standalone subsidiary and the second to be headquartered outside the UK. The company shares highly complementary expertise, capabilities and technologies with Cohort’s SEA, providing significant cross-selling opportunities. ELAC is focused on defence export markets, with naval markets accounting for 80-90% of revenues, with strong penetration in South East Asia and Europe, and will add Germany as a domestic market for the Group. It has sonar products currently in operation on various submarines and surface ships, including for the Indonesian, Singaporean, Taiwanese, Dutch and Portuguese navies.
“The acquisition of ELAC is a significant step for Cohort, adding a sixth standalone business to our growing and profitable portfolio. It is highly complementary to our core capabilities in defence and security, with a leading position in the attractive and growing submarine and surface sonar markets, strengthening and broadening the Group’s existing capabilities in maritime systems,” explained Cohort Chief Executive, Andrew Thomis. “We are looking forward to working with the ELAC team to realise the exciting growth opportunities that this transaction will create.”
This acquisition is in line with Cohort’s stated strategy to accelerate its growth by making targeted acquisitions, complementing organic growth, whether as standalone members of the Group or as ‘bolt-in’ acquisitions to existing subsidiaries. The Board believes that this strategy of investing the Group’s cash resources partly in acquisitions will provide enhanced returns to shareholders. ELAC meets the Group’s criteria for stand-alone acquisitions, which are focused on agile, innovative businesses that have reached a stage of development where there will be mutual benefit in joining Cohort. ELAC operates in a complementary market and technology space, has clear and sustainable competitive advantage and sees strong growth prospects.