Industrials sector comment – July 2011

Date

Clearwater’s industrials team has completed the sale of Farsound Engineering Ltd to RG Industries LLP, a new partnership between Rubicon Partners and Grovepoint Capital.

Farsound is a Romford-based manufacturer of high precision components for the aerospace and defence industries. The company specialises in C-class components typically used in aero-engine applications. It also operates as a provider of value-added supply chain management services for the aerospace aftermarket. The company’s activities include consignment stockholding, contract scheduling, direct line feed and kitting for products such as bearings, bolts, clips, fasteners, gaskets, rivets and seals.

UK-based industrial investors, Rubicon and Grovepoint, formed RGI to build a global portfolio of high quality industrial businesses, with a focus on those operating in the manufacturing and distribution sectors. Farsound is the first acquisition for the portfolio, and it will provide RGI with a solid platform from which to make further acquisitions in the aerospace sector.

This transaction represents Clearwater’s second transaction in the aerospace industry in 2011. Earlier this year we completed the sale of Tritech Group Ltd, a manufacturer of investment castings for a number of aerospace platforms. The purchaser of Tritech was Uni Deritend Ltd, a subsidiary of Neterwala Group Ltd of India. A recent report published by Clearwater’s industrials team highlighted the M&A opportunities available in the aerospace sector, particularly given the UK’s engineering expertise, process excellence and world class technology in this field.

Deals

Sterling Thermal Technology Ltd has acquired Applied Cooling Technology Ltd (ACT), a UK manufacturer of heat exchangers. ACT specialises in heat exchange equipment for the marine, offshore, power and railway industries.

Alstom SA has a 40% stake in AWS Ocean Energy Ltd, a UK developer of marine energy technologies. AWS will provide the French group with a major platform for growth in the market for power generation platforms based on wave technology. AWS is backed by Credit Suisse, Isleburn, Shell Technology Ventures and Tersus Energy.

VEKA AG has acquired Bowater Building Products Ltd, a UK manufacturer of PVC-u windows and doors. The acquisition of Bowater will deliver significant synergies to the German group’s UK operations.

Sinclair Knight Merz Holdings Pty Ltd (SKM) has acquired Colin Buchanan and Partners Ltd, a UK provider of consulting engineering services. The acquisition will enhance SKM’s offering for the transport and urban planning sectors in particular.

SGS SA has acquired Correl Rail Ltd, a UK provider of verification and validation services for the railway industry. Correl Rail specialises in the technical assessment of railway components and rolling stock.

US private equity firm Kenner & Co has acquired the Dynacast division of Melrose plc for £370m. Dynacast is a manufacturer of die cast components for the automotive, consumer electronics, healthcare, information technology and telecommunications industries.

Applus+ SA has acquired Brake Testing International Ltd (BTI), a UK provider of brake product development and testing services. The acquisition will be integrated into the group’s Idiada division which focuses on engineering and testing services for the automotive industry. Applus+ is backed by US private equity firm Carlyle.

WIKA Alexander Wiegand GmbH has acquired DH-Budenberg Ltd, a UK manufacturer of industrial calibration equipment. DH-Budenberg will become a part of the German group’s calibration technology division. The transaction does not include Budenberg Gauge Ltd, a UK manufacturer instrumentation valves and pressure gauges.

Redeem Group Ltd has acquired Environmental Mobile Control Ltd (EMC), a provider of electronics reconditioning services. The acquisition will enhance Redeem’s ability to provide mobile-phone recovery and recycling services.

Weir Group plc has acquired a 60% stake in HIM Tech Co Ltd, a South Korean manufacturer of choke and control valves. HIM Tech will extend Weir’s reach into the Next 11 high growth economies with its focus on service valves for the oil and gas and power generation industries.

Global Energy Group Ltd (GEG) has acquired Kaymas Electrical Engineering Ltd, a UK provider of electrical engineering services for the heavy engineering, marine and oil and gas industries. The acquisition will enhance the capabilities of GEG’s RigFit division which specialises in offshore accommodation.

Altrad Group SA has acquired NSG UK Ltd, a provider of industrial cleaning and painting, scaffolding and thermal insulation services. The acquisition builds on the French group’s recent acquisition of Beaver 84 Ltd from SIG plc.

Oxford Instruments plc has acquired Omicron NanoTechnology GmbH, a German developer and manufacturer of nano-scale microscopes. The £28m acquisition will enhance Oxford Instruments’ portfolio of products through the addition of Omicron’s ultra-high purity chemical analysis instruments for nanotechnology research. Concurrently, Oxford Instruments has acquired Omniprobe Inc, a US developer of nano-scale laboratory equipment, for £12m.

UK industrial investors Rubicon Industrial Partners and Vision Capital have acquired a portfolio of three industrial businesses from German private equity firm Paragon Secondary Partners. The three companies are ABL Technic GmbH, a German provider of specialist paint stripping services for industrial plants; Metallwarenfabrik Gemmingen GmbH, a German manufacturer of manufacturer of power generators, as well as die-castings and stampings for electric motors; and Swisshaus SA, a Swiss provider of residential building design and contracting services.

Advanced Power Components plc (APC) has acquired Quo Vadis Ltd, a UK supplier of intelligent lighting systems. The acquisition will reinforce APC’s strategy of diversifying its component distribution business into environmentally-friendly energy technologies.

Berry Plastics Inc has acquired the beverage and speciality closures business of Rexam plc for £225m. The unit specialises in compression and injection moulded beverage closures, jars and other plastic packaging products for the chemicals, food and beverage, household products, industrial and personal care markets.

Sonoco Products Co has acquired Robinson Paperboard Packaging Ltd (RPP) from Robinson Group Ltd. RPP is a manufacturer of spirally-wound paperboard containers which will enhance the US group’s growing global rigid paper container operations with a particular focus on boxes and tubes for cosmetics, food and beverages and personal care products.

Group Rhodes Ltd has acquired Slater and Crabtree Ltd, a UK provider of machining services for components used in the aerospace, heavy engineering, off-highway and oilfield sectors. The close proximity of the two businesses in Wakefield will allow Group Rhodes to strengthen its production capacity and secure its engineering skill base in the local area.

UK private equity firm Bridgepoint Capital has acquired SPP Process Technology Systems Ltd (SPTS) from Sumitomo Precision Products Co Ltd. SPTS is a UK manufacturer of plasma etch and thermal processing equipment for the semiconductor manufacturing industry.

Fenner plc has acquired Statewide Pty Ltd, an Australian supplier of industrial belting products and provider of installation services for the manufacturing and mining industries. The acquisition will enhance the service model of the group’s Fenner Dunlop Australia division which supplies conveyor belting, motion control and sealing products to the mining and power generation industries in particular.

UK private equity firm ECI Partners has invested £12m in Stewart Group Ltd, a UK manufacturer of plastics moulded products. Stewart specialises in technical plastic products for the gardening, home, medical storage and professional catering sectors.