Codan's Acquisition of Kägwerks

Codan Limited (ASX:CDA) has announced the acquisition of 100% of US-based organization SKT2 LLC dba Kägwerks (Kägwerks) through its wholly owned subsidiary Codan US Inc. The acquisition is expected to be completed in early December 2024, subject to regulatory conditions typical for transactions of this nature. Kägwerks is a global leader in tactical operator-worn networking communications technologies, specializing in providing soldiers with a lightweight network hub integrating disparate equipment into a single compact communications solution, ultimately enhancing situational awareness and strategic advantage in field operations.

Executive Commentary on the Acquisition

Paul Sangster, Tactical Communications President and Executive General Manager, expressed excitement about the acquisition, stating, 'Kägwerks' intellectual property has been field-tested and accepted into U.S Department of Defence, and its proven pedigree enables us to participate in additional tenders for other Programs.' Niko Hughes, Kägwerks President, also shared his enthusiasm, saying, 'By partnering with Codan's world-class manufacturing capabilities and top-tier suppliers, we are positioned to scale our operations, delivering even greater quality, value, and service to support the needs of our customers.'

Summary of the Acquisition and Outlook

Codan's acquisition of Kägwerks expands its tactical communications technology suite, positioning it as a US soldier communications solutions provider and enhancing its credibility in the global military marketplace. The acquisition consideration includes an upfront cash payment of approximately $33.6 million, with additional royalty payments for 5 years post-closing. In the short to medium term, Codan expects considerable sales opportunities to arise from leveraging its existing global distribution network with an international export version of the DOCK™ products. The company anticipates the acquisition to be earnings-per-share accretive immediately and expects strong growth as new products are launched beyond CY25. The leadership statements emphasize the strategic objectives of improving revenue predictability, increasing opportunities across key military and law enforcement markets, and leveraging international distribution channels for new growth and collaboration opportunities in global markets.