Shares digital

Steam-cleaning specialist boosted by acquisition

by Rachel Robson

Investors in steam-cleaning specialist Proventec (PROV:AIM) should hold on to their shares following the acquisition of a controlling stake in one of Germany’s oldest engineering companies. The deal is expected to boost Proventec’s revenue and profits and provide several cross-selling opportunities.

The £19.6 million market cap has bought a 60% stake in Frank, a manufacturer and distributor of hygienic products, including portable high-pressure washers and self-service vehicle wash stations, for an undisclosed sum.

Last year saw Frank generate turnover of more than €2 million and the acquisition is expected to make ‘an important contribution to Proventec’s increasing revenue and profitability growth and will also contribute to the company’s profit per share.’

Proventec is financing the deal through its existing cash reserves as well as through the issuance of locked-in shares. As at 31 March 2008, Proventec had £4 million in cash. The remaining 40% stake in Frank will still be owned by Samir El-Assal, the former owner who bought the company in 2006.

‘Not only is Frank’s range of products highly complementary to our own but its established global network of distributors offers many cross-selling opportunities synergies,’ says Proventec’s chief executive David Chestnutt. ‘Strategically, it offers Proventec the platform to exploit various possibilities in the industrial sector focusing on mobile and stationary water-based CIP (cleaning in place) technologies.’

Shares says: A solid acquisition which should open up further opportunities. Hold