Investment Column: Britax deal looks well-timed

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The Independent Online
BRITAX is a business transformed. Over the past five years chief executive Richard Marton has set about improving the automotive components group's margins and tightening up its structure. In the last year or so Britax has been a hive of corporate activity. The low-growth motor distribution business has been sold. Then Britax strengthened its aircraft seat business with a German acquisition. Yesterday, it bought Public Safety Equipment, a US manufacturer of sirens, video and radar kit for emergency vehicles.

The pounds 75m deal, which will be funded from borrowings, looks well-timed. Increased awareness of safety means PSE's US markets are growing at about 8 per cent a year while operating margins are a healthy 16 per cent. The acquisition also makes the group a leading supplier in the automotive aftermarket segment. And there are obvious cross-selling opportunities.

The deal leaves Britax with four profitable, growing divisions. The only worry is the leasing division - especially in the light of Arriva's profit warning - but this is relatively small and should be sold soon. Britax shares, which slipped 4.5p to 184.5p yesterday, have doubled in the past year. But with brokers forecasting profits of around pounds 53m the shares, on a forward p/e ratio of about 18, still offer good long-term value.

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