Specialist engineer IMI agrees £118m deal to buy Heatmiser

Engineering firm IMI has agreed to purchase a major UK thermostat manufacturer as part of measures to expand its presence in the ‘smart buildings’ market.

The FTSE 250 business told investors on Tuesday it plans to acquire Heatmiser for an upfront fee of £110million, followed by a further payment of up to £8million depending on future financial performance.

It believes the move willd help it take advantage of the growing demand for smart temperature controls, which it forecasts accelerating over the next few years amid the need for ‘more energy efficient, smarter, and greener’ premises.

More than 200 million buildings in Europe need upgrades to enhance their energy efficiency and comply with environmental laws, according to IMI.

Heatmiser will be integrated into IMI’s Hydronic Engineering division, a provider of heating, ventilation, and air conditioning equipment.

Founded in 1968 as an electrical contracting firm by Gordon Kay in Blackburn, Lancashire, the group is now one of Britain’s largest providers of smart room thermostats and underfloor heating systems.

It is currently run by Gordon’s children, Martyn and Sarah Kay, who will remain part of the business following the deal’s completion, which is set to happen by the end of 2022.

Heatmiser is expected to post around £22.5million in revenues this financial year, while their acquisition is forecast to be ‘growth, margin and earnings accretive’ for IMI within three years.

Roy Twite, IMI’s chief executive, said the deal is ‘fully aligned to IMI’s strategy of delivering significant shareholder value by solving industry problems and putting customers at the heart of what we do’.

He added: ‘There has never been more urgency to deliver energy efficiency and comfort in buildings, and Heatmiser is a leader in this space.’

Alongside the Heatmiser announcement, IMI released a third-quarter trading update revealing its seventh consecutive quarter of organic revenue growth on the back of solid performances from its precision fluid OEM division.

Higher demand from the power, oil and gas sectors also helped boost the order book of its critical engineering business by 11 per cent.

At the same time, the company said its restructuring programme was set to bring in £10million of benefits this year, and £20million in the years afterwards.

Because of its strong trading output and taking market conditions into account, IMI has lifted its annual earnings per share outlook to between 103p and 106p.

IMI shares were 2.4 per cent higher at £13.52 during the early afternoon on Monday, meaning their value has declined by over a quarter in the past 12 months.