Stadium Group snaps up Zirkon for bargain £2.5m

Nov 4 2008 by Peter McCusker, The Journal

FAST-growing Hartlepool-based Stadium Group is taking advantage of the turmoil in the commercial world by picking up its second bargain acquisition in a month.

And the company says it is looking for further purchases after yesterday revealing it has added £7m to its projected annual turnover of £45m with the purchase of Rugby-based electronics manufacturer Zirkon.

Zirkon, which employs 84 people, recorded a pre-tax profit of £600,000 in its last annual results and Stadium’s £2.5m acquisition is a price it could not have achieved this time last year.

Stadium Group chief executive Nigel Rogers said: “We have got a very good price for the business. With private equity retrenching, this is a good time for trade buyers. There are some attractive values to be had, at multiples which were not available last year.”

Yesterday’s acquisition by Stadium follows its purchase in late September of Fox Industries for £100,000. Stadium’s buying spree follows an impressive recent run which has seen it record a 16% rise in turnover to £23m for the first six months of 2008.

Its projected turnover for this year is £45m, which is a significant rise on the £38m it achieved in 2007.

Rogers added: “We are going through a period of rapid change in the electronics industry and there are some opportunities in the market place for consolidation. We are looking at further purchases, although this is unlikely to happen before 2009.”

The Stadium Group has three divisions – Stadium Electronics, Stadium Power and Stadium Asia – with the electronics division accounting for 80% of total turnover.

The Hartlepool headquarters, employing 130 people, includes an electronics factory making equipment for the medical, mobility, industrial, security and safety fields.

Mr Rogers said: “Zirkon neatly dovetails with what we are doing in Hartlepool. It brings total production capacity to six lines and provides us with an extended design and engineering resource. It will enhance what we do in Hartlepool. It will allow us to increase our sales potential as well as giving us a base in the Midlands.”

Stadium’s purchase of Zirkon was made possible with new debt facilities provided by Barclays Bank.

Mr Rogers added: “We have changed our bank to Barclays and negotiated better terms than we previously had. I don’t believe it’s more difficult to get bank funds, but it’s a bit more expensive than it was this time last year. We have a conservative business model and are viewed as a good risk.”

As well as its 200-plus UK workforce, Stadium has more than 1,000 staff in its Chinese factories, which mainly focus on consumer products.

With private equity retrenching, this is a good time for trade buyers. There are some attractive values to be had