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Laird PLC Acquisition of Novero for €65 million

Laird PLC (LON:LRD), the global technology company, today announced the acquisition of Novero, a leading integrated vehicle connectivity systems provider, which will enhance Laird’s offering of innovative wireless solutions in one of its core and fastest growing markets. Novero represents an excellent strategic fit and is complementary to Laird’s existing connected vehicle activities. This is in line with Laird’s strategy to invest significantly in Enterprise Internet of Things (EIoT) markets. This acquisition will place Laird as one of the leading global providers of end-to-end connectivity services both into and within the vehicle, providing the broadest portfolio of integrated connectivity solutions.

Laird will acquire Novero for a total consideration of €65 million (approximately £47.1 million) from Donares Limited. Consideration will be satisfied through the issue of 3.2 million shares in Laird to the vendors of Novero, valued at €15.5 million (approximately £11.3 million) as at the close of business on 15th December 2015 and representing approximately 1.2% of Laird’s enlarged share capital. The balance of the consideration will be paid in cash from Laird’s existing bank facilities.

Completion of the acquisition is conditional upon receiving standard regulatory approvals, which are expected within 30 days.

Background on Novero

Established in 2008, Novero is headquartered in Bochum, Germany with three outlying offices. It is a key supplier of integrated car connectivity with excellent hardware design and significant software development capabilities.

Employing around 250 people, Novero designs and manufactures; telematics control units, wireless charging modules, USB hubs, wireless signal enhancement solutions, and software applications that manage in-car connectivity systems (see figure 1 by clicking on the hyperlink below). Together, these technologies enable telematics services including vehicle tracking for fleet management, driver behaviour monitoring, eCall emergency services, insurance tracking, vehicle diagnostics and vehicle remote control. The Volkswagen Group including its VW, Audi, Bentley and Skoda marques is a major customer. Other customers include many other leading automobile and heavy truck manufacturers such as BMW, DAF, Jaguar Land Rover, MAN, Mercedes-Benz, and Ford.
Novero reported revenues of €83.7 million (£67.5 million), EBITDA of €8.4 million (£6.8 million) and PBT of €1.3 million (£1.0 million), and held gross assets of €60.3 million (£47.0 million) for the year ended 31 December 2014. During the year ending 31 December 2015, revenues are expected to be lower than in 2014 following delays to certain contracts which have impacted profitability. We have identified a clear action plan which will improve the performance. Overall we expect the acquisition of Novero to add around £5 million to underlying Group PBT in 2016. For 2017 and beyond, we expect to deliver growth at industry margins.

Benefits of the acquisition

Novero will be integrated into the Laird operating model, combining Laird’s existing Telematics capabilities to form a new business unit within the Wireless Systems segment. The integration of Novero and the recently acquired LS Research (LSR) is a continuation of our business and market diversification strategy and will mean that our Wireless Systems business will now be of a similar scale to Performance Materials.

The new business unit will realise the benefits and opportunities of our combined technology, products, services and routes to market. It is anticipated that the integrated business unit will:

· Increase our global market share in the automotive, transportation and heavy equipment market and strengthen our relationships with all the major OEMs
· Offer a full end-to-end connectivity solution, with a highly capable software platform for value-added services that strengthens Laird’s position as the premier supplier of Smart Antennae
· Provide additional technologies within the vehicle that enable; full telematics control, enhanced signal quality, over the air software updates, and the ability to integrate consumer electronics
· Increase our service offering with Electro-Magnetic Compatibility (EMC) testing facilities that can be used internally and also offered to customers
· Deliver technological synergies through sharing best practices and resources within the enlarged group, and avoid duplicated R&D costs

· Drive cost synergies through optimising manufacturing and testing facilities and the enhanced purchasing power of the combined businesses

· Further drive our differentiation principles of innovation, reliable fulfilment and speed

David Lockwood, Laird Plc Chief Executive commented “With over 250 million connected cars predicted to be on the road in the next five years; continuous and seamless connectivity for passengers, their vehicles and roadside infrastructure are becoming the expected standard. As the vehicle becomes the hub for communications and technology, this is a very exciting opportunity for Laird.

This acquisition brings together complementary skills and outstanding technologies and underpins Laird’s market strategy of providing complete vehicle connectivity solutions, creating a unique position in the connected car market. We are confident that the combined business will deliver an enhanced customer proposition in this fast growing market and deliver good value for our shareholders.

Both this and the recently announced acquisition of LSR deliver on our strategy and strengthen our capabilities in Wireless Systems. LSR added new technologies and a range of new EIoT markets, Novero takes us to a leadership position in automotive connectivity, a key market for the EIoT.”