A recent survey commissioned by the British Chambers of Commerce, which collected data from over 5,000 UK businesses reported that the UK economy continued to grow in the second quarter of the year.
Whilst this headline is encouraging, it nonetheless hides some concerns over the sustainability of recovery. The survey found that although order books softened in June, manufacturing output was expected to continue to rise and that it was the service sector that presented the biggest worry with the full effect of government spending cuts yet to be fully assessed.
From a M&A perspective, it is clear that private equity funds are investing once more and they are doing so at decent multiples. Industrial deal completions in recent weeks have included the management buy-out of AIM Aviation, the aircraft interiors design and fit out specialist, backed by Lloyds Development Capital and the Barclays Private Equity backed management buy out of Wilton Group, which provides design, fabrication, installation and project management services to the energy sector. Other deals included the Maven backed management buyout of XPD8 and the Energy Ventures/Viking Venture backed management buy-out of RWS. Both businesses provide oilfield related services.
Interestingly, last week the three best performing sectors of the FTSE 350 were Industrial Engineering, Industrial Metals & Mining and Automotive.
Overall, it would appear that the investment community has a positive outlook of where the economy is heading, particularly in the Industrials sector. Clearwater’s view supports that. We expect to see a return to higher M&A activity levels through 2010 and in particular, an emphasis in the consulting engineering arena.
LDC has backed the management buy-out of AIM Aviation Ltd. AIM Aviation is engaged in the design, production and fit-out of aircraft interiors through its AIM Composites, Henshalls and Jecco operations.
Hindustan Sanitaryware Industries Ltd (HSIL) has acquired Barwood Products Ltd, a manufacturer of ceramic bathroom products. The acquisition by HSIL’s Dutch subsidiary, Haas International BV, will offer its Building Products division better access to the UK and continental European bathroom products markets.
Sulzer AG has acquired Castle Support Services plc, the ultimate holding company for Dowding & Mills Group Ltd, a provider of electro-mechanical maintenance and repair services. The £127.5m acquisition will reinforce Sulzer’s position as a global provider of maintenance and repair services for generators, motors and turbomachinery in the aerospace, automotive, oil and gas, petrochemical, power generation and pulp and paper industries.
Goodrich Corp has acquired Crompton Technology Group Ltd (CTG), a designer and manufacturer of carbon fibre composite products for the aerospace, clean energy, defence and specialist vehicle markets. CTG’s products include flight control and power drive systems which will complement Goodrich’s Actuation Systems division.
Dover Corp has acquired BSC Filters Ltd, a developer and manufacturer of diplexers, microwave filters and waveguide components. BSC Filters specialises in products for defence, radar, satellite and telecommunications applications and will be integrated into Dover’s Ceramic & Microwave Products division.
SMT Scharf AG has acquired Dosco Holdings Ltd from Billington Holdings plc. Dosco is a manufacturer of underground mining equipment and a supplier of underground support arches through its Hollybank Engineering business. Its products include roadheaders and tunneling shields used in the mining of bauxite, coal, gypsum, iron ore, phosphates, potash and salt.
Heinzel Group GmbH has acquired Europapier AG from Mondi Packaging plc for EUR 60m. Europapier is a paper merchant specialising in graphic, office paper and packaging products. It is prominent positions in Austria and across Central and Eastern Europe.
Falcon PCB Group Ltd has acquired Flex-Ability Ltd, a manufacturer of flexible circuit boards for aerospace, consumer appliance, industrial, IT, medical, military and telecommunications applications. Flex-Ability will be renamed Merlin Flex-Ability Ltd following the acquisition by Falcon.
Sun Capital Partners has acquired Hewden Group Ltd from Finning International Inc for £110.2m. Hewden is a provider of short-term equipment rental services.
AVK AS has acquired Invicta Valves Ltd, a provider of valve and actuator solutions for industrial and utility applications. The acquisition will complement AVK’s existing product offering particularly with major water infrastructure investments commencing later next year in the UK.
General Dynamics Corp has acquired Kylmar Ltd, a designer and manufacturer of optical surveillance and sensor systems for the military and security markets. Kylmar specialises in electro-optical systems for counter-terrorism, force protection and IED detection applications.
Essar Steel Ltd has acquired Oakside Solutions Ltd, the holding company for Servosteel Ltd, a provider of steel processing services. The transaction marks Essar’s first acquisition in the UK and emphasises the Indian group’s strategy of reinforcing its distribution capabilities through service centres that supply tailor-made products.
Key Technologies plc has acquired Primetake Ltd, a developer and manufacturer of special-purpose ammunition and equipment. Primetake produces specialist ammunition for defence forces, the police and security services. It also produces ammunition for the control of bird movement at airports and farms.
Flambeau Europlast Ltd has acquired the Quest Consumer Products and Stadium Building Products operations of Stadium Group plc for £2.5m. The sale of the two businesses which comprise Stadium Branded Plastics will allow Stadium to focus on its electronics business which provides electronic manufacturing services and power supply solutions.
FLIR Systems Inc has acquired Raymarine plc, a developer and manufacturer of marine electronics, which had been in administration. Raymarine provides a range of electronic equipment for the light commercial marine and recreational boating markets. FLIR plans to expand Raymarine’s product line breadth by integrating thermal imaging cameras with Raymarine’s autopilot, display and radar product lines.
Energy Ventures and Viking Venture have backed the management buy-out of Read Well Services Ltd (RWS) from Read ASA for EUR 21.7m. RWS is a provider of downhole technology services to the oil and gas industry with a focus on cased hole logging, hydraulically expandable well construction and tubing repair services. The transaction will allow Read to focus on its core permanent monitoring and seismic services.
Torotrak plc has acquired a 15% stake in Rotrex AS, a Danish manufacturer of patented traction drive compressor equipment. The transaction will see the two companies establish a joint-venture for the development of fuel efficient technologies for smaller engines in passenger vehicles.
Smulders Group BV has acquired the business and assets of Sea & Land Power and Energy Ltd, a provider of engineering services for the offshore and renewable energy sectors. Sea & Land Power and Energy was a subsidiary of SLP Engineering Ltd which is in administration. Smulders may also acquire the assets of SLP Engineering.
Northbridge Industrial Services plc has acquired Tasman Oil Tools Pty, an Australian provider of equipment rental services for the onshore and off-shore oil industry throughout Australia. The acquisition will give Northbridge critical mass in the equipment rental market and broaden the group’s presence in the Asia-Pacific region.
Miba AG has acquired the remaining 75.1% stake in Teer Coatings Ltd. Teer Coatings is a manufacturer of physical vapour deposition coating equipment in which Miba acquired an initial 24.9% stake in July 2009.
Barclays Private Equity has backed the management buyout of Wilton Group Ltd, a provider of design, fabrication, installation and project management services for the energy sector. Wilton’s range of services also includes coating, painting and surface preparation services for the marine, offshore, power and subsea industries.
Fire Strut Pty Ltd has acquired Wire Systems Technology Pty Ltd from TT Electronics plc for £5m. Wire Systems Technology is a South African manufacturer of winding wire and electrical insulation materials.
Maven Capital Partners has backed the £6m management buyout of XPD8 Ltd, a provider of oilfield services. XPD8 specialises in the development of software tools used in the maintenance of oil rigs, as well as maintenance management tools for the shipping industry.