Standex International Corporation (NYSE: SXI) today announced that it has acquired, in separate transactions, privately-held US-based Amran Instrument Transformers and India-based Narayan Powertech Pvt. Ltd. (going forward referred to as "Amran/Narayan Group") in cash and stock transactions. These transactions represent a combined enterprise value of approximately $462 million, comprised of 85% cash and 15% in Standex common stock for Amran Instrument Transformers and 90% cash and 10% in Standex common stock for Narayan Powertech Pvt. Ltd. The 10% share exchange related to Narayan Powertech Pvt. Ltd. is subject to India regulatory approval, which is expected to take up to six months. The cash consideration of the transactions was financed using cash-on-hand, existing credit facilities, and a $250 million 364-day term loan with existing lenders. The Company intends over the next several weeks to convert the 364-day term loan into exercise of the accordion feature under its existing credit facilities. Standex will remain committed to paying down debt and expects to reduce leverage below 1.0x net debt to EBITDA ratio within the first 24 months post-transaction.
With manufacturing locations in the United States and India, Amran/Narayan Group is a leading manufacturer of low voltage and medium voltage instrument transformers. Its custom product portfolio is specifically designed and developed in partnership with OEMs for their specific equipment related to electrical grid applications. Amran/Narayan Group's products have been installed in over 50 countries around the world.
In calendar year 2024, Amran/Narayan Group estimates revenues of approximately $100 million with an adjusted EBITDA margin above 40%.
"As the largest acquisitions in the Company's history, this is an exciting milestone for Standex," said David Dunbar, President and Chief Executive Officer of Standex. "Amran/Narayan Group's extensive low to medium voltage portfolio and engineering expertise fit within our strategy to accelerate growth in secular, fast growth end markets. The combination of Standex and Amran/Narayan Group continues Standex's portfolio strategy of focusing our higher-margin business segments in faster-growing markets. With these acquisitions, Standex Electronics will now represent more than 50% of the Company, and we anticipate consolidated adjusted EBITDA margin expanding by over 200 basis points in the first full year as a combined company. We look forward to welcoming the entire Amran/Narayan Group team to our company."
"Amran will operate as a key pillar of the combined companies' low- to medium-voltage instrument transformers business," said Bhargav Shah, Founder and President of Amran. "Both Standex and Amran have a centralized focus on long-term customer relationships and customer-specific new product development, and together, we are optimistic about our combined resources to accelerate growth in the electrical grid market."
"The combination of Narayan Powertech and Standex creates a strong player in the transformer industry, with the ability to leverage a larger global footprint and portfolio breadth to create increased value for our customers," added Chirag Shah, Founder and Managing Director of Narayan Powertech. "As part of the Narayan founding team, I am thrilled to continue the journey with other key team members as part of a global leader like Standex. We believe the combination will allow for expanded growth opportunities, supported by a seamless cultural fit."
Transaction Highlights
The transactions are expected to be immediately accretive to Standex's revenue growth, EBITDA margin, operating margin, earnings per share and free cash flow in the first full year post closing of the transactions, excluding any acquisition and integration related costs. Longer term, the combination is expected to create cross-selling opportunities given the companies' complementary offerings.
Moving forward, Amran/Narayan Group's founders and leadership team will remain with the combined company. Their entrepreneurial know-how, technical skills, and extensive experience across the transformer industry will benefit the combined company with its integration efforts, innovation roadmap, and future growth.
Amran/Narayan Group will be reported as part of Standex's Electronics business segment.
Guggenheim Securities LLC is serving as financial advisor and Foley Hoag LLP and Lexygen are serving as legal counsel to Standex. Northern Edge Capital Advisors, LLC is serving as financial advisor and Chamberlain, Hrdlicka, White, Williams & Aughtry, P.C., and Khaitan & Co. are serving as legal counsel to Amran and Narayan.
