ATS acquires provider of niche food sector productivity solutions company
Automation solutions provider ATS forks out the preliminary cash purchase price of about $43.12 million to close the deal
CAMBRIDGE, Ont. – Automation solutions provider ATS Automation Tooling Systems Inc. has acquired U.K.-based MARCO Limited, a provider of yield control and recipe formulation systems in the food, nutraceuticals and cosmetics sectors.
MARCO’s solutions are based on its proprietary weighing hardware and process control software technologies.
“MARCO is a high-quality company that provides ATS with the means of entering a product-based, niche segment of the food industry that is growing at a mid-single digit rate,” “The food industry itself is attractive to ATS because it is subject to industry and government regulations driving a need for high precision technologies,” said Andrew Hider, CEO, ATS. “MARCO will serve as a first step in our expansion into an attractive new vertical market for ATS.”
In its fiscal year ending March 31, 2020, MARCO is expected to generate revenues of approximately £15 million Pounds Sterling ($25.87 million) with an EBITDA margin in the low- to mid-twenty percent range. Excluding the impact of business combination accounting, ATS expects to achieve a ten percent return on invested capital by the second fiscal year following the acquisition.
ATS will support MARCO’s growth through deployment of the ATS business model to drive operational improvements, advance geographic penetration, enter adjacent markets and expand after-sales service revenues, which currently account for about 10% of MARCO’s annual revenues. The combined capabilities of ATS and MARCO will serve the rising demand for quality and productivity in food processing and packing.
The preliminary cash purchase price for the acquisition was £25 million Pounds Sterling ($43.12 million), with up to an additional £7.3 million Pounds Sterling ($12.59 million) payable subject to an earn-out structure over the next two full fiscal years. ATS funded the acquisition from cash on hand.
MARCO, established in 1985, will continue to be led by its founders, CEO, Murray Hilborne and COO, Russel Hilborne. The company has about 70 employees.