3i portfolio company snaps up ninth add-on

3i Group Element Materials Technology has agreed to acquire specialist testing services company TRaC Global for a total consideration of £44.5 million (€62.7 million; $66.7 million), according to a statement from the London-listed group.

This is Element’s ninth add-on acquisition since 3i acquired a majority stake in the business in December 2010, and its second deal in 2015. In January Element acquired Environ Laboratories, a business based in Minneapolis, offering electromagnetic interference, electromagnetic compatibility, environmental, climatic, dynamics, hydraulics and fuel system testing services.

Element’s global network of laboratories specialises in materials testing, product qualification testing and failure analysis for the aerospace, oil and gas, and transportation and industrial sectors.

TRaC, which employs 200 engineers, technicians and testing specialists at six laboratories across the UK as well as in facilities in the US and China, adds a range of product qualification testing services, expanding the company’s range of capabilities and capacities in the aerospace sector in Europe.

“This acquisition will significantly strengthen our presence in the European Aerospace market and complement our current product qualification testing capabilities in Berlin and the US,” Element president and CEO Charles Noall said.

Following the acquisition the number of Element employees will increase to 1,800 and its number of laboratories will increase to 51, Noall added.

Element is acquiring TRaC from Bioquell, a provider of specialist microbiological control technologies to the healthcare, life science and defence markets worldwide. For the year ending 31 December 2013, TRaC posted revenues of £16.8 million (€22.6 million; $25.2 million), operating profits of £3.4 million (€4.8 million; $5.1 million) and gross assets of £12.9 million (€18.2 million; $19.4 million), according to a statement from Bioquell.

Gross cash proceeds from the sale equate to around 105 pence per Bioquell share, compared to Bioquell’s closing share price of 82 pence on 11 March 2015, and are expected to generate an exceptional profit before expenses of around £35.4 million (€49.8 million; $53.1 million), Bioquell said.

Last August Element completed a $325 million covenant-lite refinancing, supported by 3i’s in-house banking team, with plans to use the proceeds to fund recent and pending acquisitions, refinance existing debt and return capital to shareholders.

3i Group shares were up 0.42 percent at 12:23 today at 482 pence per share, giving the group a market capitalisation of £4.83 billion (€6.8 billion; $7.26 billion).