ATS Automation acquires U.K. process control provider for food industry

ATS Automation Tooling Systems has acquired the U.K-based MARCO, a provider of yield control and recipe formulation systems for the food, nutraceuticals and cosmetics sectors, for £25 million.

An additional £7.3 million is payable subject to an earn-out structure over the next two full fiscal years.

MARCO, which was established in 1985 and employs approximately 70 people, offers solutions based on its proprietary weighing hardware and process control software technologies.

“MARCO is a high-quality company that provides ATS with the means of entering a product-based, niche segment of the food industry that is growing at a mid-single digit rate,” says Andrew Hider, chief executive officer of ATS. “The food industry itself is attractive to ATS because it is subject to industry and government regulations driving a need for high precision technologies. In MARCO, we acquire a proven business that is well positioned to meet growing demand for productivity and quality-enhancing solutions.”

In its fiscal year ending Mar. 31, 2020, MARCO is expected to generate revenues of approximately £15 million with an EBITDA margin in the low- to mid-20 per cent range. Excluding the impact of business combination accounting, ATS expects to achieve a 10 per cent return on invested capital by the second fiscal year following the acquisition.

ATS will assist MARCO to make operational improvements, diversify into new geographic markets and expand after-sales service revenues, which currently account for approximately 10 per cent of MARCO’s annual revenues.

MARCO will continue to be led by its founders, CEO Murray Hilborne and COO Russel Hilborne.

ATS Automation is headquartered in Cambridge, Ontario and employs approximately 4,400 people at 23 manufacturing facilities and over 50 offices globally.