Spectris Sells Omega for €491m to Private Equity Firm Arcline

05 May 2022 by Dulce Flores
blog author

Precision management company Spectris has sold Omega Engineering for €491million to private equity firm Arcline Investment Management.

Specialist sensor provider Omega will be joining the Dwyer Group, which was acquired by Arcline in 2021. Arcline invests in industrial businesses which are technology-driven and purpose-led for a better future.

The sale of Omega was a valuation of approximately 20.4x Omega’s 2021 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

In addition to the divestment, London-based Spectris has unveiled a €356m share buy-back programme. Initially, a sum of €178m will be launched in accordance with the authority granted by the company’s shareholders at the 2021 AGM. A further €178m will be launched, subject to the approval of the Company’s shareholders at the 2022 AGM, to be held at the end of May.

Spectris focuses on delivering value beyond measure for all its stakeholders and targets global, attractive and sustainable markets, where growth and high returns are supported by long-term drivers.

The company provides customers with expert insight through advanced instruments and test equipment, enabling customers to reduce time to market, and improve processes, quality and yield so they can design, develop, test and manufacture their products to make the world cleaner, healthier and more productive place.

Omega supports customers with improving processes via an omnichannel distribution platform, while Dwyer is a global leader in the design and manufacture of innovative sensors and instrumentation solutions for indoor environmental quality, building automation, process and environmental markets.

Omega’s high-quality measurement, monitoring and control solutions are, according to Dwyer, a highly complementary product offering and Dwyer sees benefits of a scaled platform within their shared markets.

For the 2021 financial year, Omega generated sales of €153.4m, adjusted EBITDA of €23.4m, and as of 31 December 2021, the book value of Omega’s gross assets was €235m.

Completion is expected to take place early in the third quarter of 2022 and following this, Spectris will comprise three core businesses: Malvern Panalytical; HBK; and Industrial Solutions, with a much-improved financial profile, focused on high precision measurement solutions.

Omega underwent new management and launched a revised strategy in 2020, resulting in the company ending 2021 with a strong order book, positioning it well for future growth. Spectris noted that for Omega to succeed in delivering acceptable levels of profitability, the company needed scaling and believed Omega’s next stage of development was better fulfilled with the required scale provided as part of a larger group.

The divestment offers a better opportunity to generate returns for shareholders and increases the gross divestment proceeds over the past three years to well over €1bn, at attractive valuations, above the Group’s trading multiple.  

The Group will now continue to boost sustainable organic growth, with significant investment in R&D, while continuing to evaluate mergers and acquisitions opportunities.

Andrew Heath, Chief Executive, said: “In 2018, we set out to improve the quality of Spectris and simplify our business around a clear purpose of delivering value beyond measure to all our stakeholders. Spectris today is a more focused, more profitable, and more resilient business, underpinned by a very strong balance sheet. We are more aligned than ever to end markets with attractive growth trajectories, supported by key sustainability themes. The divestment of Omega will further improve our financial profile.

“This announcement is yet a further example of our approach to optimising our assets and successfully divesting businesses at multiples higher than the Group as a whole. This disposal, in conjunction with the share buyback programme, delivers clear value for shareholders, whilst also allowing us to take advantage of new growth opportunities for our core businesses, in line with our purpose.”

Dulce Flores, Principal Consultant – Private Markets & Real Assets – Europe at Acre, said: “The capital markets are proving a growing interest in investing in companies that are meaningful to society and that enable a better future. Tech-driven innovations have immediate solutions to the challenges we face today, Arcline’s investment approach is focused on companies whose products and services impact the greater good, so Omega’s acquisition is not a surprise.

“Now, they seem to rely on an ESG policy that governs their decision making. ESG integration in investment decision-making should allow more transactions that align with the world’s efforts to create a more sustainable economy and fuel sustainable growth and great returns for investors.”

Dulce Flores is a Principal Consultant within Acre's European Sustainable Finance team.

Dulce focuses on supporting private equity firms, growth and venture funds, real asset and infrastructure funds to integrate and push forward their agenda on sustainable development, ESG, and impact investing. Prior to joining Acre, Dulce spent 3 years delivering on senior mandates for a selection of financial institutions focused on facilitating the global energy transition through the transaction of carbon credits and renewable energy certificates. She joined Acre in 2020 to deliver on retained mandates for the Sustainable Finance practice within continental Europe.