Reunert acquiring Etion Create


Reunert has announced its acquisition of electronics equipment company Etion Create in order to expand its manufacturing and design capabilities and grow its international market presence.

In a notice to the Johannesburg Stock Exchange on 20 May, Reunert Limited announced it had entered into a share purchase agreement to acquire 100% of Etion subsidiary Etion Create for an initial R168 million.

“It is currently envisaged that the Purchase Price, excluding the potential successful recovery of a receivable of approximately R2.6 million and the Accrued Interest will amount to approximately R197 million. The Purchase Price shall be subject to an absolute maximum of R210 million,” Reunert stated.

The value of the net assets of Etion Create at 30 September 2021 was R159.4 million and the profit attributable for the six month period then ended was R15.7 million.

Etion Create will be integrated into the Applied Electronics segment of the Reunert group and will provide it with original design capability for the design integration and support of advanced technology in the mining and industrial; defence and aerospace; internet of things and sensors; and cyber security market segments.

After announcing Reunert’s interim results on Thursday, CEO Alan Dickson said in response to a defenceWeb question that Reunert already has an electronic manufacturing capability but this will be improved through the acquisition of Etion Create, which also has very good access to markets Reunert participates in, and has secured contracts in those markets.

He said the acquisition is “very synergistic” with Reunert’s defence assets as it enhances design and manufacturing and improves export market access. “We think it’s going to be a positive contribution to the segment if we can get it all the way to closing.”

The deal is subject to the fulfilment of outstanding conditions precedent by no later than 20 November 2022.

Etion Create (formely Parsec) offers products and services such as signal processing platforms for radar, signal processing units for electronic warfare, weapons integration and weapon control systems, military standard communication interfaces, mission computers and display electronic units, secure communications, and test equipment. Etion Create previously developed camera sensor electronics for an optical helmet tracker solution for the Eurofighter and Gripen fighter jets used by European air forces as well as the South African Air Force. One of its other key products is the CheetahNAV tactical navigation system for light military vehicles.

Reunert “wishes to expand its Applied Electronics segment and believes that the augmentation of its existing assets with the strategic positioning, value proposition and original design manufacturing skills of Etion Create will accelerate these ambitions,” the company said.

Speaking about the defence market in general, Dickson said that Reunert was seeing some stress in local business, with larger capital projects only likely to be executed in the next financial year instead of this one. Reduced defence funding in South Africa negatively impacted the Reutech communications cluster and the radar business. Reutech supplies weapons turrets, communications systems, and radars to the South African National Defence Force – its equipment is being fitted to the new inshore patrol vessels and hydrographic survey vessel being delivered to the SA Navy.

Dickson said that export prospects across the group improved since June 2021, with increased demand coming in. “We are entering a period where export orders in the defence segment are going to be a in a positive direction,” he said in response to a defenceWeb query. Although there has not been a direct uptick in sales from the war in Ukraine as NATO and the USA are supplying equipment, the general worldwide environment is seeing improved defence spending over the next few years, he added.