Industrials sector comment – August 2010


There is much talk of transactions involving quoted UK industrials groups at present. The likes of Chloride, Intelek, International Power, Scott Wilson and Tomkins have all been the subject of transactions involving cash-rich overseas groups.

If you believe the press then this trend is all about the depressed valuations of these listed entities and the timely nature of the deals for hungry North American purchasers who have built up large cash reserves through the recession. The media would also have us all believe that these transactions mark the beginning of the end for British manufacturing industry whereas in fact the complete opposite is true. The reality is that these UK targets are in fact global leaders in their sectors and the only logical targets for purchasers looking to enhance their engineering or manufacturing capabilities or penetrate new geographies which they cannot otherwise reach.

We should be celebrating the fact there is an increasing demand for the skills and expertise which the UK has to offer and that UK entrepreneurship is being rewarded by attractive valuations for engineering assets.

It is also worth noting that the transactions involving Chloride and Scott were in fact highly competitive bidding wars which demonstrated just how highly-prized these assets are. ABB and CH2M Hill respectively are feeling bruised from missing out on key acquisition targets.

This increase in industrials M&A, which has more than doubled over the last year, is also drawing private equity bidders back to the market. Vendor price expectations in industrials markets were never at the levels seen in the consumer, IT, medical, pharma and telecoms sectors, to name but a few. This translates into a unique opportunity for private equity firms to invest in manufacturing businesses that are both leaders in their niches and that are forecasting growth at levels beyond those of other supposedly more resilient industries.

The question will be whether trade purchasers get to these assets first or whether the private equity investors can bring their own sector expertise and knowledge to the table.


Valvitalia SpA has acquired Broady Flow Control Ltd, a manufacturer of safety valves for the marine, oil and gas, petrochemical and power generation industries. The acquisition will reinforce the Italian group’s portfolio by adding products serving the naval defence industry including valves for Royal Navy vessels.

Emerson Electric Co has acquired Chloride Group plc, a developer and manufacturer of uninterruptible power supply (UPS) equipment. The £997m transaction will see Chloride serve as the headquarters for the US group’s new European Network Power Systems operations and form the basis for Emerson’s European UPS growth strategy.

Shanghai Huanuan Boiler Vessel Ltd has acquired Cochran Ltd, a manufacturer of boilers, burners and combustion equipment. The transaction was completed as a pre-pack administration and will secure the company’s manufacturing operation in Dumfriesshire as a development centre.

TMD Friction GmbH has acquired Eurofriction Ltd, a manufacturer of replacement brake pads. The acquisition strengthens TMD Friction’s position as a global leader in the development and production of brake pads for the independent automotive aftermarket.

HurleyPalmerFlatt Ltd has acquired Integrated Design Associates Ltd (IDS), a provider of consulting engineering services. The two companies had operated a strategic alliance for four years.

Teledyne Inc has acquired Intelek plc, a designer and manufacturer of communications, electronics and instrumentation equipment. The £28m acquisition will expand Teledyne’s range of products for the aerospace, defence and satellite communications markets.

Filtronic plc has acquired Isotek Holdings Ltd, a designer and manufacturer of telecommunications products for a range of wireless infrastructure applications. The £4.4m acquisition will allow Filtronic to establish itself in the market for customised, high added-value base station filters.

Renishaw plc has acquired a 29% stake in Measurement Devices Ltd (MDL), a developer and manufacturer of laser-based measurement systems. The acquisition complements Renishaw’s range of metrology products and will allow the group to penetrate the air traffic control, marine and quarrying markets. The group intends to acquire the remaining stake over the next 4 years.

Fenner plc has acquired MRI Medical Inc, a US manufacturer of silicone-based products for medical devices. The acquisition expands Fenner’s expertise in elastomer and polymer engineering and moves its medical products division into more performance critical applications.

DS Smith plc has acquired Otor SA, a French manufacturer of corrugated packaging. The acquisition enhances DS Smith’s continental European corrugated packaging business and reinforce its presence in the fast moving consumer goods sector. The transaction provides an exit for Carlyle, the US private equity firm.

Amplio Filtration Holdings Inc has acquired Puresep Holdings, a manufacturer and wholesaler of water filtration and treatment systems. The acquired business comprises Filtration Technologies Ltd and Puresep Water Technologies Ltd.

Eberspächer GmbH has acquired Ricardo plc‘s German exhaust manufacturing business. The disposal will allow Ricardo to focus on its core design engineering and strategic consulting services.

URS Corp has acquired Scott Wilson Group plc, a provider of consulting engineering services. The £223m acquisition will place URS in the top ten UK consulting engineering firms by revenue and give the group access to the nuclear power market in particular.

Curtiss-Wright Corp has acquired Specialist Electronics Services Ltd (SES), a designer and manufacturer of rugged and security encrypted data recorders, display media, processors and software for the aerospace and defence industries. The £15m acquisition will be integrated into the US group’s Motion Control division.

Privet Capital has acquired Thermal Engineering Ltd, a manufacturer of hot-formed alloy components for the aerospace and power generation industries. Thermal Engineering specialises in the production of airframe, structural and thermal insulation components.

Onex and Canadian Pension Plan have acquired Tomkins plc, a diversified manufacturer of automotive components, construction products, fluid power products, industrial valves and power transmission products. As a result of the transaction the group’s headquarters will be moved to Denver, Colorado and its operations refocused on its Gates Industrial business.