Shares in Chemring were down on the FTSE 250 in morning trading after the defence company said it was acquiring the Detection Systems Operations of General Dynamics Armament and Technical Products for $90 million.
Part of the funding for the acquisition will come from the placement of 17.4 million new ordinary shares by Chemring, a move that will raise £112.3 million and was also announced today.
Detection Systems is based in North Carolina and develops devices for detecting chemical and biological threats and for stand-off detection of Improvised Explosive Devices (IEDs). The company provides its products to two major US military vehicle mounted detection programmes. Last year the company reported a pre-tax profit of $8.3 million and turnover of $61.5 million.
Chemring said that the acquisition would enhance its existing IED detection capabilities and is expected to be earnings accretive in the full year ended 31 October 2012.
Dr David Price, Chief Executive of Chemring, commented, "This acquisition substantially enhances our counter-IED business activities with leading-edge US technology for biological, chemical and stand-off explosive detection. It will provide a complementary capability to our existing subsidiaries, NIITEK and Chemring EOD, and help us expand our growing global market."
By 10:55 shares in Chemring were down 0.15 per cent on the FTSE 250 to 668.00 pence per share.