Structural Monitoring Systems Plc (ASX: SMN) has executed a strategic Share Sale Agreement (SSA) to acquire international aerospace industry electronics specialist Anodyne Electronics Holding Corporation (AEM) for C$10 million.
Structural Monitoring Systems (SMS), which recently signed a breakthrough contract with giant US firm Delta Airlines, said the acquisition will make an instant impact on its books and on its technology development capacity.
AEM a leading designer and manufacturer of a wide range of aerospace products including avionics, aircraft audio systems, intercoms, tactical FM radio systems, illuminated panels and display products, external PA systems, audio amplifiers, audio adapters and remote switch assemblies.
AEM also generates a consistent C$13 million in top line revenue and in excess of C$2 million in normalised-EBITDA annually.
The two companies have a strong working relationship, with AEM being SMS’s aerospace-certified contract manufacturer.
In 2011, AEM partnered with SMS to design and manufacture CVMTM sensors and related equipment for the aerospace industry. AEM has contributed its expertise throughout the research and development phase, and is solely responsible for manufacturing all of SMS’s CVMTM product lines.
SMS Executive Director, Mike Reveley, said the “AEM acquisition is a milestone next step for the company.
Negotiations with aerospace OEMs and operators are now centred around the ability of SMS to meet the unique challenges presented by aircraft fleets operating 24/7 around the globe,” Mr Reveley said.
“The ability to control all aspects of our operations from R&D to manufacturing to quality assurance and shipping is critical. The 90+ dedicated and professional staff at AEM, combined with the added strength of our consolidated financial position, satisfies all the necessary requirements to achieve our growth objectives.”
SMS will also benefit from AEM’s Sales, R&D, Finance, Human Resources, Quality Control, IT, Manufacturing and Maintenance/Repairs divisions.
AEM President and Founder David Veitch, said the deal has many positives for both companies.
“SMS will benefit from AEM’s certifications to manufacture and repair aviation equipment and its strong administration,” Mr Veitch said.
“AEM will benefit by expanding its customer base as well as increased utilisation of its existing facility which will lower the cost base for all its manufacturing.”
Under the sales agreement. SMS Management will control all the critical decisions relating to engineering of sensors and equipment, R&D work, quality assurance and manufacturing. This will help safeguard a flawless execution at one of the most critical stages of the SMS will also benefit from the fact that AEM holds Canadian and international certifications that enable it to serve the highly-regulated aerospace industry with manufacturing and repair services.