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Scapa follows doctor's orders

Buying high-quality medical business WEBTEC is a great move that keeps Scapa's turnaround firmly on track
January 4, 2012

Scapa delivered shareholders an early Christmas present, buying Tennessee-based WEBTEC for $30m (£19.2m) in cash. It will cough up an extra $15m if the adhesive-backed medical devices firm meets tough profit targets this year and next.

IC TIP: Buy at 53p

Chief executive Heejae Chae is delivering on his promise of a business split equally between the electronics, industrial and medical divisions. And, clearly, the City is delighted with a deal that increases the sales contribution of the medical unit from 18 per cent to 25 per cent.

WEBTEC converts medical grade silicone, foam, film, foil and hydrogel into its customers' products, and margins are high. It should contribute £1.8m of pre-tax profit in the year to March 2013, according to analysts at Arden Partners, and company forecasts are for revenues of $29m in 2011.