The Codan Limited (ASX: CDA) share price is down despite it announcing an acquisition of UK-based company Broadcast Wireless Systems.
Codan was founded in 1959 to tackle a range of challenges in electronics engineering. It is now an international company that manufactures and supplies electronic solutions, with technology including metal detection and communications. Its headquarters are in Adelaide, South Australia.
Codan acquisition
Today Codan announced that its subsidiary Domo Tactical Communications Limited (DTC) is acquiring UK-based company Broadcast Wireless Systems Limited (BWS).
The transaction will be funded by Codan’s existing debt facility with an upfront payment of $3.7 million. An additional payment of up to $4.8 million will apply if certain earn-out targets are achieved over 3 years.
Who are Broadcast Wireless Systems (BWS)?
Codan management said that BWS has a technology portfolio mainly of wireless video camera links and has newly developed a range of high quality video broadcast products.
The COVID-19 pandemic has created a need for broadcasters to develop remote production capabilities.
Through DTC and BWS technologies, management will be able to offer DTC customers a low-latency, high performance remote solution. This type of remote technology is required in challenging operations such as the world’s most prestigious motor racing events.
Continuing Codan strategy
This acquisition is aligned with its strategy of investing and strengthening its core businesses.
The company said that its other recently acquired businesses, DTC and Zetron, continue to make good integration progress. Both are on track to deliver FY22 EBITDA targets.
Management acknowledged that the acquisition of BWS isn’t to the same scale as the previous acquisitions. However, it is strategically important and broadens DTC’s technology offering in the growing remote broadcast industry.
The company said that acquiring BWS with the broadcasting technology is advantageous and faster than developing the technology internally.
Codan said that the acquisition will add to earnings from day 1 of ownership, with BWS delivering an EBIT of around $600,000 in the financial year ended 30 June 2021.
