Xaar acquires Megnajet

Xaar has acquired Megnajet, a British inkjet company that mainly makes ink management and supply systems, in a deal worth £4 million. The acquisition also includes Technomation, which traded under the Megnajet name and will now be merged with Megnajet. 

John Mills, took over as CEO of Xaar at the end of 2019.

This fits neatly with Xaar’s intention to offer its customers additional components, such as ink supply systems, alongside its core printhead business. Indeed, CEO John Mills outlined his strategy to me at the end of 2020 to use partnerships and acquisitions to be able to offer a “single stop shop” to customers. Xaar has worked with Megnajet for several years and has now taken the opportunity to acquire the company to help Megnajet expand further. 

Megnajet, which was started in 2010 by Steve Childs, is based mainly in Kettering but also has offices in Cambridge. The company designs and manufactures fluid delivery systems that are suitable for use with most printheads currently available. These are said to be amongst the smallest and simplest to integrate on the market. They’re widely used in applications such as labelling and packaging as well as textile and ceramic printing, plus also additive manufacturing and material deposition.

Graham Strudwick, Megnajet’s Technical Director, had previously started his own consultancy, Technomation, and had developed the core R&D behind the ink supply systems. He retained ownership of this IP when he joined Childs, taking advantage of MegnaJet having the manufacturing capability to produce the ink systems he had designed. This in turn meant that although the two companies worked together as one, they had to be treated separately for the acquisition.

Xaar has paid £1.8 million in cash for each company, Megnajet and Technomation, with a further £200,000 for each deferred for two years, a total of £4 million funded from Xaar’s existing resources. Both companies were acquired free of debt and on a normalised working capital basis. Megnajet generated a profit before tax of £0.3 million and had gross assets of around £1.3 million in the year ended 28 February 2021. Technomation generated a profit before tax of £0.4 million and had gross assets of £0.6 million roughly in the year ended 31 January 2021. Xaar has said that it expects to earn an annualised revenue of roughly £3 million and to be earnings accretive in the current financial year ending 31 December 2022.

Mike Seal, head of Xaar’s Advanced Applications division, will take charge of Megnajet as general manager. Childs will take the opportunity to retire while Strudwick has now become the Xaar Group’s new Director of System Component Integration. Since Xaar and Megnajet have worked together in the past it should be relatively simple to integrate Megnajet into Xaar’s operation. At the same time, Xaar will want to keep Megnajet as a separate independent company that can continue to serve customers using printheads from other vendors. 

Mills concluded: “This acquisition demonstrates further progress of our growth strategy as we focus on offering our customers a more integrated inkjet solution. As well as enhancing Xaar’s world class inkjet expertise, Megnajet’s excellent reputation within the inkjet industry for delivering compact and easy to integrate products will ensure we can attract new opportunities through providing a more rounded approach for our customers.”

You can find further details from xaar.com and megnajet.com.

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