FOS Capital is set to acquire Aldridge Traffic Systems' street lighting assets for $3.1 million, backed by a $3.7 million equity raise to fund the deal and expansion plans.
- Acquisition of ATS assets valued at $3.1 million
- Equity raising of $3.7 million via placement at $0.30 per share
- ATS has 60 years in road lighting with $6 million FY24 revenue
- Non-core assets from Traffic Technologies to be divested or closed
- FOS aims to restore ATS within two years leveraging management expertise
Strategic Acquisition to Expand Market Presence
FOS Lighting Pty Ltd, a subsidiary of FOS Capital Limited, announced its acquisition of the street lighting business assets of Aldridge Traffic Systems (ATS) from the ASX-listed Traffic Technologies group, currently in administration. The deal, valued at $3.1 million, includes plant and equipment, inventory, and intellectual property, positioning FOS to strengthen its foothold in the road lighting sector.
The acquisition aligns with FOS Capital’s broader strategy of growth through targeted acquisitions, following six previous deals since 2019. By integrating ATS, FOS aims to expand scale, access new markets, and capitalize on ongoing government infrastructure spending.
Funding the Deal Through Equity Raising
To finance the acquisition and associated working capital needs, FOS is raising $3.7 million through a placement of approximately 12.3 million new shares at $0.30 each. This price represents a modest 3.2% discount to the last closing price, reflecting a balanced approach to attracting investors while preserving shareholder value. Shaw and Partners is managing the placement as sole lead manager and bookrunner.
The equity raise is contingent upon the release of assets from secured creditors, with settlement expected by 20 June 2025. Upon completion, FOS will have approximately 67.1 million shares on issue, positioning the company for its next phase of growth.
Reviving a Legacy Road Lighting Business
ATS brings a rich heritage of over 60 years in designing and manufacturing data-enabled LED road lighting and related equipment. Despite generating $6 million in revenue in FY24, ATS has faced declining sales due to limited strategic focus and capital constraints. FOS management, led by Managing Director Con Scrinis; who previously helmed Traffic Technologies; is confident in restoring ATS to its former market position within two years.
The acquisition also includes non-core assets from Traffic Technologies, such as Deneefe, Sunny Signs, L&M, and QTC, which FOS plans to divest or shut down. Proceeds from these disposals, estimated between $0.5 million and $1 million, will bolster working capital to support ATS’s turnaround and expansion.
Leveraging Technology and Market Position
ATS’s portfolio includes energy-efficient LED streetlights and intelligent transport systems featuring smart-city technology with IoT connectivity. This recurring revenue model from connected devices offers a promising growth avenue. FOS’s existing Eclatec product range complements ATS’s offerings, enabling synergies and operational leverage through consolidated manufacturing in Brisbane and Sydney.
FOS’s acquisition strategy has previously delivered operational efficiencies and margin improvements, exemplified by the integration of KLIK Systems and facility consolidations. The ATS deal is expected to further these gains and solidify FOS’s role as a key provider in the fragmented road lighting market.
Bottom Line?
FOS Capital’s acquisition of ATS marks a pivotal step in its growth journey, but execution risks remain as the company seeks to revive a legacy brand amid evolving infrastructure demands.
Questions in the middle?
- How quickly can FOS restore ATS’s sales and profitability to previous levels?
- What impact will divesting non-core assets have on FOS’s short-term cash flow?
- How will government infrastructure spending trends influence ATS’s growth prospects?