AIM Review

A bevy of recent deals could prove significant with fair winds behind them, writes James Crux

Buying sprees and easy takeovers that characterised the bull market run are but a fading memory, but deals are still getting done. Three recent acquisitions, each international in nature, could prove highly lucrative for those AIM companies involved.

Matica mounts US challenge

First up, a canny deal pulled off by Milan-based plastic card issuing and personalisation equipment maker Matica.

Domiciled in Switzerland, the company supplies a wide range of plastic card personalisation and metal plate embossing and plans a major assault on the US market this year following the assumption of 100 per cent control of US subsidiary Matica Americas, previously a 50/50 joint venture with a US based partner.

CEO Sandro Camilleri sees this deal (no financials were disclosed) spearheading a challenge to Datacard, the dominant US market leader in this field, as well as opening up growth possibilities in Canada and Latin America.

In the US market, hopes are high that Matica’s new flexible modular machine, twinned with distribution problems at Datacard, will help Matica make meaningful market inroads.

Floated on AIM two years ago at £1, tightly held shares in Matica fell to 21p last October, yet have since perked up to 40p on positive news flow, such as the turning of £1.3 million losses into £1 million of annual pre-tax profits for 2008, on turnover increased 12 per cent to £15 million.

Carting counter goes cherry picking

Another counter to have struck a deal in the US is Supercart, the bombed-out designer and distributor of all-plastic shopping trolleys.

Disappointing from an investment point of view – its shares have fallen from a 2004 AIM issue price of 50p to a recent 5p – Supercart nevertheless is a pretty interesting business behind “revolutionary” all-plastic shopping trolleys that are easier to use, more hygienic and more durable than their metal counterparts. Fully recyclable, they have virtually no “wheel wobble” and will not jam.

In a deal fans say could prove a steal, the company has cherry picked assets from a failed venture, Rehrig, in a deal capped at US$1.45 million (£980,000) in cash.

Now, Rehrig was formerly one of the biggest plastic shopping trolley makers in the US, until it entered Chapter 7 liquidation last December. Acquired assets include the plastic trolley moulds of Rehrig’s main eight models as well as certain stock, work in progress and the IP rights to certain Rehrig brands.

Supercart’s 37.2 per cent shareholder Venture clearly spies value, having helped the company finance the deal and support its US expansion by way of a loan repayable over two years. Considering that sales for the brands acquired in 2007 were some $27 million, this deal could prove very significant with fair winds behind it.

Investors hope so, since Supercart’s latest reported numbers, for the six months to June 2008, showed a widening of operating losses from £578,000 to £725,000.

Though turnover grew 26 per cent to more than £1 million, driven by strong growth in the South African market, the P&L incurred increased marketing and selling costs in North America and Europe in readiness for the launch of new products.

Aussie deal for First Derivatives

Finally, the first of April heralded an acquisitive move from First Derivatives, the provider of ‘mission critical’ capital markets technology, which commands an £29.87 million AIM price tag at 217.5p.

The company views potential aplenty in its acquisition of Hologram, an Australian based technology company, for a total cash consideration of up to $2.2 million Aussie dollars, as well as the issue of 400,000 share options to the principals linked to performance.

Hologram’s proven expertise lies in risk management and stock exchange trading software and First Derivatives sees the takeover quickening growth in Asia Pacific and providing another channel to market for its Delta range of financial services sector products.

First Derivatives has continued to trade robustly, despite the storms engulfing global financial markets, drawing strength from its positioning as a niche supplier of “mission critical” technologies. At the interim stage, the company reported a 21 per cent rise in pre-tax profits to £2.24 million – analysts are expecting full year profits of £5 million for the year to February 2009.

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James Crux

James was editor of Growth Company Investor as well as writing for our sister titles What Investment and Business XL, before moving on to be an editor at Shares Magazine in 2011.

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