FOBA is a laser marking and engraving company serving industrial markets around the world since 1992.
Under terms of the agreement, Virtek paid 1.5 million Euros ($2.4 million Cdn) on closing. Payments to the HASCO Group over the next three years include 500,000 Euros ($800,000 Cdn) as part of the purchase price and 570,000 Euros ($912,000 Cdn) for the business assets of FOBA North America Laser Systems, LLC. Virtek will also assure the payment by FOBA of a long-term note of 1.7 million Euros ($2.7 million Cdn) to the HASCO Group. There were no Virtek shares issued as part of the transaction. In addition, Virtek has agreed to guarantee FOBA's operating line of up to 1 million Euros ($1.6 million Cdn) to support its on going operations.
FOBA was privately held by the HASCO Group -- a worldwide supplier of standard elements for mould, tool and jig making, who continues to hold the remaining 25% ownership of FOBA. After the fifth anniversary of the acquisition, Virtek has an option to purchase the remaining 25% interest of FOBA from HASCO. Purchase price would be subject to fair market valuation at the time Virtek chooses to exercise the option.
Virtek expects FOBA's sales to contribute approximately $20 million Cdn to its fiscal 2004 revenues. This amount will be fully accretive to Virtek's existing revenues. In FOBA's last fiscal year ended December 31, 2002, FOBA realized a loss of 1.7 million Euros ($2.7 million Cdn) due to efforts to restructure the operation and heavy dependence on limited distribution channels. In the first two months of this calendar year, FOBA operated near break-even. Virtek anticipates reporting a small profit for FOBA during Virtek's fiscal period ending January 31, 2004.
"This acquisition is a strategic fit that will significantly increase Virtek's revenue and provide us with a permanent base in Europe to back the current and future European sales, service and application support of our laser system products," says Bob Sandness, president and CEO of Virtek. "Virtek and FOBA operate in the same industrial laser space with complementary products. Together, there is a tremendous opportunity to accelerate revenue growth by focusing on new markets and entering into new geographic territories."
Virtek will retain FOBA's facilities in Ludenscheid, Germany; Nuremberg, Germany and Lee's Summit, Missouri, USA. It is expected that all of FOBA's 98 employees from these facilities will stay on to contribute to the future success of the business.
"The FOBA business, while not core to HASCO's focus, is a perfect marriage for Virtek," adds Sandness. "FOBA's proven laser-based products, dedicated team, established customer base and ability to build their own lasers and laser systems will give Virtek the competitive advantage needed to expand our existing glass and wood truss marking business and improve our margins. Virtek's established global distribution, seasoned sales force and laser marking product development professionals will further expand FOBA's market penetration. We're very pleased with the opportunities for growth moving forward."