Luxfer has entered into an agreement to acquire the assets and business of Truetech, Inc. and of Innotech Products, Ltd for an estimated total of $64m.
The proposed deal represents a multiple of approximately eight times the expected EBITDA for 2014. Closing is subject to required regulatory approvals, including those covering key suppliers to the US military. These approvals are expected to take up to two months. Other Luxfer subsidiaries are already approved suppliers to the US military for other products.
Truetech and Innotech produce magnesium-based heating pads for self-heating meals used by the US military and emergency relief agencies; an extensive line of self-heating meals, beverages and soups used by military and civilian end-users; chemical agent detection and decontamination kits; and seawater desalinisation kits.
Luxfer will combine the businesses of Truetech and Innotech within Luxfer Magtech Inc. (LMI), a new wholly owned subsidiary of Luxfer Group. LMI will operate as part of Luxfer Group’s Elektron Division.
Truetech operates a manufacturing and warehousing facility on a company-owned site in Riverhead, New York, and Innotech operates a leased product manufacturing, assembly and distribution facility in Cincinnati, Ohio.
The Truetech® Flameless Ration Heater (FRH) is used by US armed forces to heat Meals, Ready-to-Eat (MREs) for troops in the field. Millions of FRHs are supplied annually under a long-term contract to manufacturers of ready-to-eat military meals. Nearly two billion Truetech ® heaters have been supplied to date across all markets.
Truetech FRH technology uses no flame or electricity to generate heat. When water reacts with the magnesium-iron heater pad, the FRH releases enough energy to heat a pre-cooked meal in about 10 minutes. Spent heaters are non-toxic and biodegradable.
Truetech and Innotech also offer food and beverage products for civilian markets. These include four lines of self-heating HeaterMeals® that contain nutritional entrees, snacks, desserts and juices. The companies also market Café2Go® Self-Heating Beverage kits for making hot coffee, tea, cocoa and soups, including brand-name varieties from Nestle® and Unilever®.
Because all of these products require no refrigeration and have useful shelf lives, they are used for outdoor activities, emergency preparedness and disaster relief. End-users include the US Department of Homeland Security; the Federal Emergency Management Agency (FEMA); first responders at federal, state and local levels; non-governmental disaster-relief agencies, including the Red Cross; campers, hikers, hunters, climbers and other outdoor enthusiasts; and workers at remote construction sites. Government Food Service magazine has named HeaterMeals (Innotech) in its list of top US Government food suppliers.
Luxfer CEO Brian Purves said, “This acquisition is firmly in our target market of ‘Protection’ technologies, and is uniquely synergistic to both arms of our Elektron Division. Our expertise in the design of magnesium alloys should be beneficial to developing the next generation of flameless heaters, and the adsorbent properties of our MELsorb® zirconium chemicals are thought ideal to progressively improve the active component of decontamination products. I am delighted that the management team of Truetech and Innotech, with their long experience in these products and markets, has agreed to join the board of Luxfer Magtech Inc. to help us develop the business further over the next few years.”
Joel Hockett, President and CEO of Truetech and Director of Innotech, said, “It was time for these businesses to become part of a global enterprise, and I look forward to seeing them develop within Luxfer Group.”