The recent UK trade mission to China led by the Prime Minister opened the door for many UK groups to pursue business opportunities in the Chinese market.
Whilst many still remain fearful of exploring China for new growth opportunities, the time is coming for a genuine mutually beneficial relationship. Protection of intellectual property remains paramount, of course, yet genuine partnership-based relationships are developing between UK and Chinese groups. A participant on the trade mission was Invensys plc which has been building a model of reciprocity with a small number of critical partners. These provide Invensys with access to the local market, whilst in turn the Chinese players are benefitting from the group’s leadership position in areas such as control systems for the railway industry and operations management systems for process industries, including the all-important power industry in China.
As UK groups explore these avenues, the subject of M&A will naturally come to the fore, as has been seen in the case of Invensys and its peer China Southern Rail. There is now a strong logic for the Chinese interest in acquiring assets in the mining, oil and gas and petrochemical industries to spread to other markets. China’s immediate need for access to natural resources is widening into a demand for expertise in other related industries. The result is the emergence of Chinese purchasers for engineering and manufacturing businesses and, whilst the preference for larger assets persists, we are starting to see Chinese groups pursuing smaller acquisitions. In the past month Chinese groups have emerged as possible purchasers for two Dutch industrial assets. Chongqing Machinery and Electric Co Ltd is in the frame for the acquisition of Hyva NV, the manufacturer of hydraulic equipment owned by 3i.
Meanwhile, the sale of Draka NV, the manufacturer of high voltage industrial and subsea cables, to Prysmian SpA has been scuppered by a counter proposal from Xinmao Group Ltd. These two transactions, should they complete, would certainly set a precedent of great significance for vendors of UK industrial assets.
Halma plc has acquired Alicat Scientific Inc, a US designer and manufacturer of mass flow meters. The £15.7m acquisition will be integrated into the Health and Analysis division within its Fluid Technology group of businesses where it will add new fluid flow measurement technologies for industrial and life sciences applications.
Weir Group plc has acquired American Hydro Corp, a US manufacturer of turbine components for the hydro-electric power generation market. American Hydro will accelerate Weir’s growth in hydro-electric markets in Europe and North America. In conjunction with this acquisition, Weir is investing £6m in a new service centre in Montreal to support American Hydro’s sales growth in Canada.
Cooper Industries Inc has acquired Apex Lighting Controls Ltd, a UK manufacturer of energy management and lighting controls. The acquisition will be integrated into Cooper’s Lighting division where it will complement the group’s Greengate Energy Management business in North America by adding integrated energy usage and lighting control capabilities for the commercial, government and healthcare markets in Asia, Europe and the Middle East.
Atlas Converting Equipment Ltd has been acquired in a management buyout from Bobst AG. Atlas Converting Equipment is a supplier of slitting and slitter rewinding equipment for the packaging industry under the Atlas and Titan brand names.
Fenner plc has acquired an initial 50% stake in Belle Banne Victoria Pty Ltd, an Australian provider of conveyor belt maintenance services to the materials handling and mining industries. The business will be integrated into Fenner’s Dunlop Conveyor Services division where it will reinforce its position as a provider of conveyor products and services to the Australian brown coal and energy sectors.
MWH Global Inc has acquired Biwater Services Ltd, a UK provider of construction and engineering services for the water industry, from Biwater Holdings Ltd. The combined businesses will be able to offer a wide portfolio of services for wet infrastructure assets including carbon reduction and energy management, infrastructure rehabilitation and refurbishment.
600 Group plc has acquired the Tannow machine tool production facility of Bumar Group Spzoo. The Polish plant will expand 600 Group’s manufacturing footprint in Central and Eastern Europe and allow it to shorten its supply chain.
AES Engineering Ltd has acquired Ceetak Engineering Group Ltd, a UK manufacturer of mechanical seals. The acquisition will be integrated into the group’s AESSEAL division where it will add its diaphragms, gaskets and O-rings to the group’s range of products for energy, oil and gas and packaging applications.
Schenck Process GmbH has acquired Clyde Process Solutions plc (CPS), a UK manufacturer of materials handling and pneumatic conveying equipment for the building products, chemicals, food processing, metals, minerals and plastics industries. The £33.3m acquisition will enhance Schenck’s portfolio of energy saving and environmental solutions whilst the group will offer CPS penetration of emerging markets in China, India and South America.
Panasonic Electric Works Co Ltd has acquired the semiconductor encapsulation materials business of Cookson Group plc. The acquisition will be integrated into Panasonic’s Electronic Materials business in Singapore.
A consortium of investors led by Maven Capital Partners has backed the £5.5m management buy-out of Flexlife Ltd, a UK designer of flexible pipe systems for the oil and gas industry. The consortium, which also includes Simmons Parallel Energy Fund, will hold a significant minority stake in Flexlife with management retaining the majority stake.
WS Atkins plc has acquired Gimsing & Madsen AS, a Danish provider of consulting engineering services. The acquisition will enhance Atkins’ capabilities in bridge, structural and tunnelling design in the Scandinavian highway and railway sectors in particular.
James Lister & Sons Ltd, a distributor of industrial supplies, has been the subject of a family buy-out. The transaction sees the family’s 35% shareholders acquire the remainder of the equity from other members of the family.
US private equity firm AEA Investors has acquired Lone Star PRD Group Ltd, a UK supplier of speciality fasteners and gaskets for the oil and gas, petrochemical and power generation industries. The transaction provides an exit for US private equity firm Trinity Hunt Partners.
Hurlingham plc has acquired Manroy Systems Ltd, a UK designer and manufacturer of defence equipment. Manroy’s range of products includes general purpose and heavy machine guns, as well as mounting systems and weapon tripods. The transaction constitutes a reversal of Manroy into the AIM-listed cash-shell.
Crane Co has acquired Money Controls Ltd, a UK developer and manufacturer of payment systems for the amusement, gaming, retail and transportation markets. Money Controls, formerly owned by Coin Acceptors Inc, will be integrated into Crane’s Merchandising Systems division where it will enhance the group’s range of products including bill validation, coin dispensing and coin validation equipment.
Amari Metals BV has acquired the French and German Service Centres Aero aluminium trading operations of Rio Tinto plc. The acquisition will enhance Amari Aerospace’s processing, stockholding and distribution activities.
Total Safety Inc has acquired Scotsafe Ltd, a UK supplier of safety equipment and services. The acquisition will allow the US group to provide a more comprehensive offering to the North Sea oil and gas market including the supply of breathing air, gas detection systems and other critical safety systems.
Petrofac plc has acquired a 12.6% stake in Seven Energy International Ltd, a Nigerian provider of production and processing services for the oil and gas industry. The £64m transaction will allow Petrofac and Seven Energy to co-operate in relation to oil and gas production opportunities in Nigeria and will see Petrofac increase its stake to 19.2% subject to certain performance conditions and milestones.
AGCO Corp has acquired Sparex Holdings Ltd, a UK distributor of accessories and tractor replacement parts. The £53m transaction will enhance AGCO’s ability to serve the agricultural aftermarket and provides an exit for Rubicon Industrial Partners.
BAE Systems has acquired Stratsec Pty Ltd, an Australian provider of information security and intelligence services, for £15m. The acquisition supports BAE Systems’ strategy to expand its existing range of information security services with a particular focus on cyber security.
Trelleborg AB has acquired Watts Tyre Group Ltd, a UK manufacturer of tyres for specialist vehicles including forklift trucks and materials handling equipment. The £21.6m acquisition strengthens Trelleborg’s Wheel Systems division’s position in industrial tyres market with a significantly enhanced presence in the aftermarket through Watt Tyre’s Interfit service business.
Sicame SA has acquired WT Henley Ltd from TT Electronics plc for £11.9m. WT Henley is a designer and manufacturer of low and medium voltage electricity distribution and transmission equipment.