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Agreement to acquire 3M’S ballistic protection business


Avon Rubber is pleased to announce that it has signed an agreement to acquire 3M’s ballistic-protection business (the “Business”) and the rights to the Ceradyne brand for an initial cash consideration of approximately $91m (£75m) (the “Acquisition”), subject to closing and customary adjustments. A further contingent cash consideration of up to $25m (£21m) is payable depending on the outcome of pending tenders.

The RNS, presentation, and a recording of the webcast can be found at the following link:


  • The Board believes that the Acquisition represents a very attractive opportunity in line with our strategy and that the core strengths of the Business are closely aligned with those of the Group:
    • A leader in critical personal protective equipment, with strong brand recognition and established positions with the U.S. Department of Defense (“U.S. DOD”), Rest of World Military and Law Enforcement customers;
    • Track record of profitable revenue growth with a financial profile which is consistent with the Group’s medium-term objectives;
  • Visibility underpinned by existing, secured U.S. DOD contracts for next generation ballistic helmets and body armour;
  • Significant organic growth opportunities through new product development and broadening of the Rest of World Military and Law Enforcement customer base;
  • Strong and capable management team, who will remain with the business;
  • Excellent research and development capabilities with ongoing, customer funded programmes for next generation ballistic helmets and body armour, and a history of successful new product innovation and launches; and
  • Integrated and well invested manufacturing facilities with existing capacity to scale production.
  • Operating primarily from three sites in the U.S. with approximately 280 employees, the Business is a leading provider of next generation armour solutions, including ballistic helmets and body armour, and is a trusted supplier to U.S. and Rest of World Military and Law Enforcement customers.
  • In the year ended 31 December 2018, the Business delivered revenue of $85.4m and EBITDA of $10.8m.
  • Recurring annual net cost synergies of approximately $5m (£4m) are expected to be delivered in the first full year of ownership from integrating Information Technology systems and back office functions. The one-off costs to implement are expected to be approximately $10m (£8m).
  • The initial cash consideration of approximately $91m, which is subject to closing and customary adjustments, is payable on completion and will be funded from existing cash resources and an increased three year revolving credit facility of $85m.
  • If the Business is successful in pending tenders for legacy products, a contingent cash consideration of up to $25m will be payable. The exact payment will depend on the value of any delivery orders resulting from these tenders.
  • The Acquisition is expected to close in the first half of the Group’s 2020 financial year, subject to U.S. regulatory approvals and customary closing conditions.
  • The Acquisition represents further progress in the execution of the Board’s stated strategy:
    • Significantly widens Avon Protection’s product range in the personal protective equipment segment with a leading brand for next generation ballistic helmets and body armour;
    • Deepens our presence in the U.S. and relationship with the U.S. DOD as a key supplier of ballistic helmets and body armour for the Soldier Protection System (“SPS”);
    • Enhances both the Group’s research and development and manufacturing capability, providing capacity to support further growth and broaden the combined future product range;
    • Places Avon Protection at the forefront of technological development across Chemical, Biological, Radiological and Nuclear (“CBRN”) and ballistic armour;
    • Allows Avon Protection to expand the Business’ reach, opening opportunities to cross sell its products into our broader Rest of World Military and Law Enforcement customer base;
    • Value enhancing, with the Acquisition expected to deliver a return on investment exceeding the Group’s Weighted Average Cost of Capital as well as being significantly earnings enhancing in the first full year of ownership; and
    • Organic revenue growth, margins and cash conversion base projections for the combined Group are consistent with our strategic objectives, with post acquisition net debt to EBITDA not expected to exceed 1.0x.

Trading Update

The Board is pleased to report that trading in the second half has continued in line with its expectations, as outlined in the Half Year results announcement on 1 May 2019. The Board therefore remains confident of achieving its current year expectations.

A pre-close trading update will be released on 16 September 2019.

Commenting on the Acquisition, Paul McDonald, Chief Executive Officer of Avon Rubber, said:

The acquisition of 3M’s ballistic-protection business is an important strategic step for Avon Protection.

The Business is a high-quality business, backed by proprietary technology, established contract platforms and well invested manufacturing operations. The combination of the Business and Avon Protection will significantly strengthen our technology and our personal protection product offering to an enlarged customer base, thereby accelerating the long-term growth prospects for the Group.

We believe that incorporating the Business into the Avon Protection portfolio will allow the business to expand more rapidly into Rest of World Military and Law Enforcement markets providing sustainable value creation for customers and shareholders. We look forward to welcoming the Business into the Avon Rubber family.

We are delighted to have identified an opportunity that fits our clear commercial and financial criteria, with a strong cultural fit. In the short term we will be focused on ensuring a successful and efficient integration of the two businesses and we look forward to continuing to make further strategic progress over the remainder of the year and beyond.”