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ATS Acquires Specialized Provider of Productivity Solutions to the Global Food Packing Industry
ATS Automation Posted 12/16/2019
CAMBRIDGE, ON /CNW/ - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company"), an industry-leading automation solutions provider, today announced it has acquired MARCO Limited ("MARCO"), a provider of yield control and recipe formulation systems to help customers in the food, nutraceuticals and cosmetics sectors increase productivity and meet stringent industry regulations. MARCO's solutions are based on its proprietary weighing hardware and process control software technologies.
"MARCO is a high-quality company that provides ATS with the means of entering a product-based, niche segment of the food industry that is growing at a mid-single digit rate," said Andrew Hider, Chief Executive Officer of ATS. "The food industry itself is attractive to ATS because it is subject to industry and government regulations driving a need for high precision technologies. In MARCO, we acquire a proven business that is well positioned to meet growing demand for productivity and quality-enhancing solutions. MARCO will serve as a first step in our expansion into an attractive new vertical market for ATS."
In its fiscal year ending March 31, 2020, MARCO is expected to generate revenues of approximately £15 million Pounds Sterling with an EBITDA margin in the low- to mid-twenty percent range. Excluding the impact of business combination accounting, ATS expects to achieve a ten percent return on invested capital by the second fiscal year following the acquisition.
ATS will support MARCO's growth through deployment of the ATS Business Model to drive operational improvements, advance geographic penetration, enter adjacent markets and expand after-sales service revenues, which currently account for approximately 10% of MARCO's annual revenues. The combined capabilities of ATS and MARCO will serve the rising demand for quality and productivity in food processing and packing.
The preliminary cash purchase price for the acquisition was £25 million Pounds Sterling, with up to an additional £7.3 million Pounds Sterling payable subject to an earn-out structure over the next two full fiscal years. ATS funded the acquisition from cash on hand.
MARCO was established in 1985, and today has approximately 70 employees, the majority of whom work at its headquarters in Edenbridge, United Kingdom. MARCO will continue to be led by its founders, CEO, Murray Hilborne and COO, Russel Hilborne. "Joining ATS enables us to take advantage of ATS's global reach, industry-leading technologies and after-market services platform," said Mr. Murray Hilborne. "This exciting combination will benefit MARCO's customers and employees. The management team and I look forward to working with ATS to enable MARCO to take the next step in realizing its full potential and ambitions."
Additional information on MARCO, its markets and the transaction are contained in a slide deck available on the ATS website (www.atsautomation.com) under Investor Relations / Investor Presentations.
ATS is an industry-leading automation solutions provider to many of the world's most successful companies. ATS uses its extensive knowledge base and global capabilities in custom automation, repeat automation, automation products and value-added services, including pre-automation and after-sales services, to address the sophisticated manufacturing automation systems and service needs of multinational customers in markets such as life sciences, chemicals, consumer products, electronics, food, beverage, transportation, energy, and oil and gas. Founded in 1978, ATS employs approximately 4,400 people at 23 manufacturing facilities and over 50 offices in North America, Europe, Southeast Asia and China. The Company's shares are traded on the Toronto Stock Exchange under the symbol ATA.
MARCO offers innovative hardware and software solutions that provide control from the arrival of the raw material to the dispatch of the packed product within the business' operations. Based on the MARCO Trac-IT® suite of products, these yield control systems offer weighing-centric controls and are designed to maximize productivity, minimize over-pack, monitor operator performance, identify unaccountable losses and ensure pack consistency. MARCO's systems provide IIoT-enabled smart factory capability through real time reporting, allowing customers to make informed decisions about all aspects of their facility. MARCO's installations range from standalone hardware applications to factory-wide Manufacturing Execution Systems. MARCO's products have been installed in 43 countries within the food, nutraceutical, and cosmetics industries.