Stealth acquires Force for $9.5m

Chris Wharton-chaired Stealth Group Holdings has announced it will acquire 100 per cent of Force Technology International for approximately $9.5 million.

Emerging from a trading halt on Wednesday, the industrial distribution group intends to have the deal finalised by June 14.

Stealth’s funding for the acquisition will be sourced courtesy of an allotment of around 14.44 million new company shares at an issue price of 24.23 cents per share, which will generate $3.5 million – along with Force’s existing $6 million capital finance facilities with the Commonwealth Bank, which Stealth would assume in line with the consideration package.

Should Belmont-based Force generate an earnings before interest, tax, depreciation and amortization of $2.5 million or higher during the 2026 financial year, it could be eligible for a one-off outperformance incentive cash payment.

Stealth told the market despite the acquisition, Force chief executive officer Carl Bonham and other members of senior management will remain in their respective roles.

The combined entity is predicted to generate $159 million in revenue for the 2024 financial year, along with an EBITDA of $8.5 million.

Stealth managing director and CEO Mike Arnold said both entities are likely to benefit from the transaction.

“By integrating Force, we are strategically positioned to leverage their extensive distribution network and customer base – whilst providing Force with new customer channels in business and trade,” he said.

“This move will accelerate our growth, introduce new products, importantly our own-label range, and enhance our market penetration.

“The synergies from this acquisition, combined with expanded customer channels and increased operational efficiencies, will drive significant value for Stealth, enhancing our competitive edge and delivering stronger returns for our shareholders.”

During the first six months of the 2024 financial year, Stealth generated revenue of $56.5 million, along with a net profit after tax of $500,000, up 49.1 per cent from the prior corresponding period.

Additionally, the company’s operating cash flow rose by 65 per cent, from $1.8 million to $2.9 million, while its net debt fell by 42.1 per cent from $10.1 million to $5.8 million.

Stealth shares closed trade up 9 per cent to 25 cents.