- Technology company Calix will purchase Inland Environmental Resources (IER) for US$6.5 million
- This acquisition will help expand Calix’s presence in the U.S.
- The company successfully completed a $12 million placement to help fund the purchase
- A share purchase plan is also underway to raise an additional $1.5 million
Environmental sustainability tech company Calix has signed a contract to purchase Inland Environmental Resources (IER) for US$6.5 million.
Calix develops a unique patented technology to provide industrial solutions that address global sustainability challenges.
Its technology is being used to develop more environmentally friendly solutions for advanced batteries, crop protection, aquaculture, wastewater, and carbon reduction.
IER, which was founded in 1997, is a Magnesium Hydroxide Liquid (MHL) business which has specialised in the application of its MHL for treatment of waste water in food processing industries.
IER purchases locally sourced magnesium oxide and “hydrates” it to magnesium hydroxide. IRE has four manufacturing facilities in Washington State and Iowa and sells over 20,000 tonnes per year to 80 customers.
Following the purchase, Calix has outlined some short term and long term goals. Its short term goals will be looking to drive top-line revenue growth in U.S.
As part this, Calix will be expanding its offering in California by using IER’s food processing expertise and expanding into new geographies and segments.
In the long term, Calix will be looking to drive margin growth and introduce more highly active products.
The company also said it believes there is potential to establish a strategic relationship with a North American-based magnesium oxide producer.
The acquisition of IER is expected to contribute revenue of $13.4 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.1 million, on an FY19 pro-forma basis.
IER President Doug Kelly is excited about the purchase.
“IER is excited about joining the Calix team to utilise its unique MHL product stability and reactivity characteristics to drive further growth into our primary North American markets and expand the applications of these high quality, environmentally friendly technologies,” he said.
Calix Managing Director Phil Hodgson agrees with Doug, and believes it is a great opportunity for both companies.
“IER represents a great opportunity to leverage our technology into a great local US company to accelerate growth,” he said.
“We look forward to welcoming the IER team to Calix and working with them to build a great business in the US,” he added.
Calix has completed a placement to sophisticated and professional investors at 70 cents per share to raise $12 million to cover the acquisition and associated transaction costs, and additional capital for further U.S. market expansion.
The company will also offer a share purchase plan to eligible shareholders to subscribe up to $30,000 of Calix shares at 70 cents apiece.
The purchase plan will be capped at $1.5 million.
Calix dropped 3.29 per cent on the ASX today and is currently selling shares for 74 cents each at 1:06 pm AEST.