- Access to skilled workforce the main benefit, TT says
- £400,00 of synergies expected by year three
TT Electronics (TTG), a manufacturer of electronic components, is buying Ferranti Technologies’ Power and Control arm from Elbit Systems for £9m.
Oldham-based Ferranti P&C makes power and control parts for aerospace and defence companies.
TT Electronics said one of the main benefits of the deal is access to Ferranti’s “highly skilled” workforce. It will also enhance earnings, generating a return that will be above the group’s cost of capital from year one, it added. By year three, it expects to have generated about £400,000 of cost synergies.
Trading for TT Electronics' 2021 financial year is in line with an update provided in late November, which said that it stands to make an adjusted operating profit of about £35m on revenue growth of about 10 per cent.
Consensus earnings forecasts of about 18p per share for its current year indicate that the company’s shares trade at just over 14-times earnings, in line with their five-year average. Although TT Electronics has (thus far) managed to pass on increased costs to customers, we maintain our hold recommendation until there are signs that supply chain pressures ease.