Chemring strengthens US presence with ADG acquisition

UK countermeasures specialist Chemring Group is to acquire United States-based Allied Defense Group (ADG) for USD59 million, Chemring's sixth US purchase since January 2008.

Chemring also posted strong results for 2009, which saw pre-tax profits and earnings per share (EPS) soar by 66 per cent and 62 per cent, respectively, on the back of its successful programme of acquisitions.

On 19 January, Chemring announced that it has entered into a conditional agreement to purchase ADG for USD7.25 per share, representing a price tag of USD59 million.

However, closure of ADG's head office in the US will add costs of approximately USD5 million, and short-term investment in working capital in the region of USD15 million will be required, said Chemring, resulting in an overall enterprise value for ADG of approximately USD79 million.

Headquartered in Virginia, ADG has two principal operating subsidiaries: Mecar SA, a Belgium-based niche manufacturer of medium and large-calibre ammunition, particularly for modern, light armoured vehicles (LAVs); and Mecar USA Inc, which provides load, assemble-and-pack and procurement services for the US government and prime contractors.