22 September 2010 – acquisition

The group has announced a recommended offer for Mount Engineering, another of our featured companies, with a cash bid worth 70p per share.  This will cost Redhall £16.5m and will be funded by a combination of existing cash resources and debt.  The purchase will enhance Redhall’s presence in the oil and gas sector; strengthen its manufacturing capability for specialist equipment used in high hazard markets; strengthen existing sales channels and provide cross-selling opportunities and increase the proportion of Redhall’s earnings that are of a repeat and cash generative nature.  The acquisition is expected to be earnings enhancing in the first year following completion.  Shares in Redhall looked cheap before this news and the shares are a BUY.