Leicester grinding machine maker Jones & Shipman is believed to be buying Edgetek Machine Corporation, an American surface grinder, for $5.8m (£3.5m).
Wes Lee, Edgetek’s president, would not deny that his company was the target of a takeover from Jones & Shipman, which is already a European distributor for Edgetek machines.
The deal would enhance Jones & Shipman’s portfolio of surface grinding machines, give it a manufacturing base in the US, and help it hedge against currency fluctuations.
Rob Gordon, Jones & Shipman finance director, confirmed that there was to be a US acquisition but would not name the target. `It gives our product a greater US feel to it,’ he said. `It’s an acquisition for technologies which are competitive.’
Under the deal, Jones & Shipman will buy 80% of the shares in the US firm by paying $2.9m. A further $2.4m will be paid on completion, and $500,000 a year later.
The company will finance the acquisition through borrowings. A first instalment of $2.9m, and an additional working capital investment of $1m, has raised the company’s gearing to 38%. Gordon claimed to have enough cover for interest rates.
Jones & Shipman has the option to buy the remaining 20% equity later.