* Buys detectors unit from General Dynamics in $90 mln deal
* Business currently supplies U.S. military
* Cash deal funded with $184 mln share placing
* Proceeds also “to take advantage of future opportunities”
* Chemring shares up 0.7 percent
LONDON, April 20 (Reuters) - British military equipment maker Chemring (CHG.L) is to spend $90 million buying a business that supplies the U.S. military with devices for detecting chemical and biological threats.
Chemring said in a statement on Wednesday that it had agreed to buy the Detection Systems operations and other related assets from General Dynamics Corporation (GD.N) in a cash deal that will be funded through the issue of new shares.
Detection Systems, based in Charlotte, North Carolina, generated a pretax profit of $8.3 million last year on revenues of $61.5 million and the acquisition is expected to boost earnings at Chemring as of next year.
Chemring said the deal would enhance its existing operations supplying devices to detect improvised explosive devices (IEDs). As well as existing contracts to supply the U.S. military with vehicle-mounted biological and chemical agent detectors, Chemring said Detection Systems’ other products include a stand-off explosives detector and hand-held chemical detector.
In a separate statement Chemring announced a placing of 17.4 million new shares at 645 pence each to raise 112.3 million pounds ($183.6 million). The placing is fully underwritten by Investec.
Of the proceeds, about 55.2 million pounds will be used to pay for Detection Systems with the remaining 57.1 million pounds earmarked for “to take advantage of future opportunities”.
The company said it continued to trade in line with management’s expectations.
Shares in Chemring were up 0.7 percent at 673.5 pence by 0742 GMT versus a 1.1 percent stronger FTSE 250 midcap index .FTMC.
Reporting by Paul Hoskins; Editing by Matt Scuffham