ECI deal completed at c.9x EBITDA – why that headline multiple matters
Rosebank Industries has completed the acquisition of Electrical Components International (ECI), previously announced on 6 June. The transaction values ECI at an enterprise value of approximately 9x expected 2025 Adjusted EBITDA. Enterprise value is the value of the whole business including debt; EBITDA is operating profit before interest, tax, depreciation and amortisation, often used to compare businesses regardless of capital structure.
The cash consideration was approximately £1.5 billion and shareholder approval was secured on 1 July. With completion now done, the strategic pivot from cash shell to operating group is real, not theoretical.
ECI is trading well: record margins, more wins, and tariffs fully recovered
ECI’s first-half performance was in line with Rosebank’s expectations and included a record H1 adjusted operating margin of 15.1%, up 3 percentage points year on year. Adjusted operating margin is operating profit margin excluding items the Board deems non-trading or one-off. That step-up is meaningful in a components business where a single point of margin can swing cash generation.
New business wins in H1 2025 were up 28% on the prior year and are accretive to current margins. Tariffs incurred in the period were fully recovered, which indicates pricing power and disciplined customer terms. On completion, ECI’s leverage was “materially reduced,” freeing up significant additional cash flow.
Improvement plans started immediately: a restructuring plan has begun, the St Louis head office is being closed, and Diego Laurent (formerly Finance Director at GKN Powder Metallurgy) becomes ECI’s Finance Director with immediate effect. In short, the operational playbook is open and in use from day one.
H1 2025 numbers for Rosebank: small adjusted loss, big statutory costs
Before consolidation of ECI, Rosebank reported an adjusted operating loss of £2.2 million for the six months to 30 June 2025. The statutory operating loss was larger at £33.2 million, reflecting acquisition-related costs and a fair value loss on a hedging instrument.
| Metric (H1 2025) | Figure |
|---|---|
| Adjusted operating loss | £2.2 million |
| Statutory operating loss | £33.2 million |
| Adjusted loss after tax | £1.2 million |
| Loss after tax (statutory) | £32.2 million |
| Adjusted EPS | (5.7p) |
| Basic EPS (statutory) | (160.7p) |
| Free cash flow | (£1.2 million) |
| Net cash used in operating activities | (£5.1 million) |
| Cash and cash equivalents (30 June) | £55.2 million |
Cash at 30 June included £11.0 million of ECI capital raise proceeds received in advance. The balance sheet also shows derivative financial liabilities of £15.2 million linked to a deal-contingent hedge (more on that below). Net assets fell to £15.6 million from £43.9 million at December, primarily due to acquisition-related charges recognised in the period.
How the deal was funded: £1.16 billion equity plus new $900 million debt facilities
Post period-end, Rosebank issued 386,607,653 shares on 3 July 2025, raising approximately £1.16 billion. In parallel, the Group agreed new banking facilities totalling $900 million, split between a $400 million term loan and a $500 million revolving credit facility. These facilities support refinancing of ECI’s existing indebtedness and working capital for the enlarged group.
Transaction costs for the ECI deal are expected to be approximately £60–£65 million, including around £11 million of bank arrangement fees. During H1, £11.9 million of non-contingent acquisition-related costs were recognised in adjusting items.
Hedge mechanics: why a £15.2 million fair value loss showed up
Rosebank entered a deal-contingent hedging instrument to lock the US dollar rate for acquisition payments at approximately 1.35, depending on the execution date. Because the hedge was contingent on the deal, it sits as a derivative on the balance sheet. The fair value loss at 30 June was £15.2 million and is included in adjusting items given its size and non-trading nature. This is accounting noise rather than operating underperformance, but it did weigh on the statutory figures.
Share count and trading status: readmission at 8.00 a.m. on 21 August
For AIM technical reasons, shares will be cancelled and readmitted to trading at 8.00 a.m. on 21 August 2025. The issued ordinary share capital remains unchanged at 406,607,653 ordinary shares following the July capital raise. This is an administrative step; it does not alter shareholders’ economic position.
Why this update matters for investors
This RNS turns Rosebank from a cash shell with a plan into an operating group with a sizeable asset. The price paid implies confidence in ECI’s earnings quality, and the early operational moves suggest the team is focused on margins and cash from the outset. Critically, ECI’s own H1 showed record profitability, tariff recovery and stronger order momentum.
On the flip side, the headline statutory losses, sizeable transaction costs (£60–£65 million expected) and the derivative loss are all drags on near-term reported earnings and equity. Integration risk is real, and while leverage at ECI is said to be “materially reduced,” no exact leverage figure is disclosed.
Positives I see
- ECI delivered a record 15.1% adjusted operating margin in H1, up 3 percentage points year on year.
- New business wins up 28% and accretive to margins – a good sign for 2026+ visibility.
- Tariff costs fully recovered, pointing to pricing discipline and resilient customer relationships.
- Immediate operational actions (restructuring, HQ closure, new Finance Director) show momentum.
- Financing in place: £1.16 billion equity and $900 million of committed facilities.
Where I’m cautious
- Statutory loss after tax of £32.2 million and a fair value derivative hit of £15.2 million will cloud reported earnings for a while.
- Transaction costs are heavy at £60–£65 million.
- Integration execution is key; specific synergy targets are not disclosed.
- “Materially reduced” leverage at ECI is encouraging but not quantified.
Key definitions for quick clarity
- Adjusted results: exclude significant, non-trading or one-off items such as deal costs and share-based payments.
- Free cash flow: cash generated after all trading costs; Rosebank reported (£1.2 million) in H1.
- Readmission: an AIM technical process where shares are temporarily cancelled and then relisted; it does not change the share count or ownership.
What to watch next
- First trading update that includes ECI post-completion performance and any quantified synergy or margin targets.
- Leverage and cash conversion at the enlarged group – especially after refinancing ECI’s debt.
- Progress on the restructuring plan and benefits from the St Louis head office closure.
- Any update on the hedging instrument’s residual impact and the unwind of transaction-related adjusting items.
Josh’s take
This is a clean execution of a big first deal. The target is performing, the financing is lined up, and the operators are getting to work straight away. The near-term optics on statutory profit are messy, but that is typical of deal closes with contingent hedges and heavy fees. If the 15.1% margin proves durable and those 28% higher wins feed through, the 9x multiple can age well. As ever, delivery will do the talking from here.
