Combining the two technologies, allows for a packaged device that provides the natural gas operator/user a complete energy analysis (from sample to results) in less than five (5) seconds – a process that now takes from 12 to as much as 40 minutes – giving the operator the ability to obtain almost "real-time" results simply unavailable from any other current technologies.
In addition, Orbital-UK's in-house engineering capabilities, manufacturing relationships, and R&D infrastructure are expected to accelerate the adoption of the Vergence device, while allowing the company to control all calibration, packaging, delivery, engineering support and more within the Orbital-UK facilities; thus allowing CUI Global to capture an even larger percentage of operating margins from the final, packaged device. Anticipated cost synergies include leveraging existing sales and distribution infrastructure for cross-selling opportunities.
The acquisition will also immediately add significant revenues and earnings to CUI Global. The SPA calls for purchase of all of the outstanding shares in Orbital-UK and its subsidiary for a gross purchase price of £17.0 million. The transaction is expected to close by April 30, 2013, subject to customary closing conditions, including regulatory approval. The purchase is to be funded in part by a future equity offering and available cash resources.
Orbital-UK's unaudited historical results for calendar year 2012 show that it produced net income of approximately $3.1 million on gross revenues in excess of $23.0 million. An unaudited pro forma condensed combined statement of operations for FY 2012 results in net earnings of $511,399 or $0.03 earnings per share ("EPS") on gross revenues of more than $63.9 million.With Orbital-UK's capabilities, reputation, and extensive contacts throughout the natural gas industry, this acquisition allows CUI Global to speed up and enhance the development and adoption of its proprietary Vergence Technology. In addition, Orbital-UK will be working to rapidly bring its natural gas product line to a broader international market using CUI Global's market partners and global distribution capabilities.