Legend buys fibre cable producer

Legend Corporation (ASX:LGD) will pay an initial $9m to buy a fibre optic cable producer and a specialist cable tool supplier

Electronics manufacturer and distributor, Legend Corporation (ASX:LGD), has arranged to acquire a fibre optic cable producer and a cable tooling company in two transactions.

Legend said it will pay an initial $5.75 million for the acquisition of MSS Fibre Group, a supplier of fibre cables and related products and services. MSF consists of MSS Fibre Systems and MSS Power and Fibre Systems.

CEO Brad Dowe said the deal “provides Legend with access to the rapidly emerging fibre optic market.”

The transaction will also involve a deferred payment of up to $2.75 million depending on MSF meeting ebit targets, with an FY12 ebit of at least $2.1 million required for the maximum payment to be made.

Legend said MSF is expected to generate FY11 revenues of $7.5 million and ebit of $1.5 million. MSF will operate as a distinct division of Legend Corp.

Separately, Legend announced plans to acquire MSS Power Systems for an initial $3.3 million and a deferred payment of up to $1.1 million.

MSS Power Systems develops specialised tools for cables used by telecom and power companies. It forecasts sales of $4.7 million and an operating ebit of $900,000 in FY11.

Both deals will be funded through existing cash and debt facilities, and both have an effective acquisition date of 1 July.

LGD shares grew 1.49 per cent on Wednesday to $0.340.

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