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Essentra Unit to Make China Acquisition
Monday 17 May 2021

UK-based components and solutions provider Essentra plc's (LSE: ESNT) Essentra Overseas Ltd subsidiary has signed an agreement to purchase the business of China-based Jiangxi Hengzhu Electrical Cabinet Lock Co., Ltd via a newco, the company said.

Closing of this transaction is subject to customary conditions, including regulatory approval and incorporation of the newco, and is anticipated in 3Q21.

Essentra will initially hold a 73% stake in the newco, with the remainder held by the current principal owner of Hengzhu.

The remaining 27% stake is subject to put and call options whereby Essentra may acquire the minority shareholding for a consideration determined by future operating performance and capped to a maximum upper limit of JPY 37.5m (or c.GBP 4m).

The initial consideration to be paid by Essentra for this transaction is JPY 100m (or c.GBP 11m), which will be fully funded from existing facilities.

Hengzhu is an access hardware manufacturer and distributor in China. The business operates from a single facility in Yichun, Jiangxi and has a workforce of c.490 employees.

The majority of Hengzhu's sales are domestic and the business serves over 7,000 customers which are typically mid-sized industrial manufacturers focused on market categories such as data centre storage equipment and power distribution.

Essentra is a provider of essential components and solutions.

Organised into three global divisions, Essentra focuses on the light manufacture and distribution of high volume, enabling components which serve customers in a range of end-markets and geographies.

Headquartered in the United Kingdom, Essentra's global network extends to 34 countries and includes 7,065 employees, 50 principal manufacturing facilities, 32 sales and distribution operations and three research and development centres.

Essentra Components is a manufacturer and distributor of plastic injection moulded, vinyl dip moulded and metal items.

Operating in 25 countries worldwide, 15 manufacturing facilities and 25 sales and distribution centres serve more than 82,000 customers with a rapid supply of low cost but essential products for a variety of applications in industries such as equipment manufacturing, automotive, fabrication, electronics and construction.

The division also includes the Reid Supply business, which provides a range of branded hardware supplies to a broad base of industrial customers, largely located in the US Mid-West.

Essentra Packaging is one of only two multicontinental suppliers of a full secondary packaging range to the health and personal care sectors, with 25 facilities across three geographic regions.

Essentra Filters is the only global independent cigarette filter supplier. The twelve sites across nine countries, including three R and D centres, provide a flexible infrastructure strategically positioned to serve the tobacco sector.
Date Published: 17/05/2021