AB Dynamics is pleased to announce the acquisition of Venshure Test Services LLC.
VTS is a leading provider of dynamometer-based testing services to the automotive sector in the USA, particularly focussed on the development and deployment of electric vehicles (EV) for US based automotive OEMs.
Headquartered in Chelsea, Michigan, VTS offers a full range of testing services including mileage accumulation and assessment of EV powertrain and battery performance across a range of extreme climatic conditions.
The business comprises a 23,300ft2 testing facility strategically located close to the Detroit area and includes dynamometers and EV vehicle testing laboratories. The vehicle testing laboratories provide standardised procedures to validate EV battery energy consumption and range testing, producing SAE J1634 quality data.
The Acquisition supports several of the Group's strategic priorities including:
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Further alignment of the Group's Testing Services operations to the structural growth drivers in the automotive sector;
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Expanding the Group's capabilities and broadening the scope of services in the Testing Services area;
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Complementing the Group's existing California-based track testing services business with laboratory-based testing; and
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Opportunity to replicate testing services capabilities across both locations.
The maximum consideration payable for VTS is $30.0m (£23.6m), comprising an initial cash consideration of $15.0m (£11.8m). The Acquisition has been completed on a cash-free, debt-free basis with the initial cash consideration funded from the Group's existing cash resources and short-term utilisation of part of the Group's revolving credit facility. Contingent consideration of up to $15.0m will be payable in cash across two tranches for the 2 years following completion, subject to meeting certain performance criteria for both years.
VTS has a good track record of profitable, cash-generative growth. Based on unaudited accounts, in the year ended 31 December 2023, VTS generated revenue of $3.5m (2022: $2.4m), earnings before interest, tax, depreciation and amortisation ('EBITDA') of $1.9m (2022: $1.2m) and adjusted operating profit of $1.5m (2022: $0.8m). Unaudited net assets at 31 March 2024 were approximately $5m.
The Board expects that the Acquisition will be earnings enhancing in FY24, with revenues for the 5-month period forecast to be approximately $1.8m (£1.4m) and adjusted operating profit of approximately $0.7m (£0.5m).
VTS is being acquired from its two shareholders, Mr Gerard Glinsky and Mr David Ploucha, both of whom will remain in the business to ensure ongoing delivery of the growth expectations.
Dr James Routh, AB Dynamics Chief Executive Officer, said:
"I am very pleased to announce the acquisition of VTS and the expansion of the Group's testing services provision in the USA. The acquisition expands both our capability and geographic coverage in the important and growing field of EV battery and powertrain performance evaluation."
"Customer focus on electric vehicle and battery technology is a long-term trend that will support continued growth at AB Dynamics as competition increases and new vehicle models require additional development work, testing and validation.
"VTS has a first-class reputation for providing vehicle testing services to its OEM customer base and we look forward to leveraging the sales capabilities of AB Dynamics to drive cross-selling and expand this further.
"We expect the acquisition to provide us with an excellent platform for further growth and we are delighted to welcome the VTS team to AB Dynamics.”
More information on VTS can be found here: www.venshuretest.com