Industrials sector comment – June 2009


The three major concerns of corporate borrowers large and small are cited as

  • The availability of finance for the coming 12 – 24 months
  • Covenant compliance under existing facilities
  • The increased cost of credit

The bank’s credit committees have been difficult to predict but there are clear trends emerging. Lending multiples have come down, there are less lenders in the market, breaching covenants is a very bad place to be and margins have increased dramatically. Against this backdrop it is hardly surprising that many corporates have been reluctant to utilise bank facilities for acquisitions.

Some activity has been seen at the stressed or distressed end of the market where it is perceived there are good opportunities to be had but general activity for the month was low.

Unsurprisingly, owners of businesses in sectors offering the best protection from recession are in the strongest position to realise best value in the remainder of 2009 and into 2010. In the mid-market, these sectors are likely to include organisations with some reliance on public spending, e.g. those serving the infrastructure sectors. And the oil & gas, energy & power, aerospace & defence and environmental arenas will continue to offer exciting opportunities as the structural globalisation of their markets gathers momentum.

There have been a broad spectrum of recent deals in these sub-sectors, with a clear skew towards those businesses providing consulting services, such as Capita Symonds acquisition of AMM, AMEC’s acquisition of JBA and the Charterhouse backed buy-out of Wood Mackenzie.


Capita Symonds Ltd has acquired Andrew Martin Associates Ltd (AMM), a provider of consulting engineering services. AMM will be integrated into Capita Symonds in order to reinforce its range of environmental and transportation engineering services.

Deltaform Ltd has acquired Chiltern Thermoforming Ltd, a manufacturer of hygienic packaging products. The acquisition will enhance Delatform’s range of products for the food packaging sector.

AMEC plc has acquired Journeaux Bédard & Associates Inc (JBA), a Canadian provider of environmental and geotechnical engineering services. The acquisition will diversify AMEC’s client base in the mining industry and expand its activities in Quebec and Eastern Canada.

Ashton Group Ltd has acquired Bonded Seals Ltd, a manufacturer of O-rings and other sealing products. Bonded Seals will be integrated into the group’s Ashton Seals subsidiary in order to expand its ranges of gaskets, lubrication equipment and seals.

GKN plc has established a joint-venture with Huayu Automotive Systems Co Ltd, a Chinese manufacturer of automotive components and systems. The joint-venture will be named Shanghai Natiefu Driveline System Sales Co Ltd and will focus on the production of driveline products.

Cyrus-RW Group Ltd has acquired Taylor & Sons Ltd’s manufacturing division. The acquisition will expand Cyrus-RW’s range of fabrication and precision machining capabilities for infrastructure and process plant installations.

Charterhouse Capital has backed the buyout of Wood Mackenzie Ltd, a provider of consulting services to the energy, metals and mining industries, for £553m. The transaction represents an exit for Candover Partners which had seen considerable private equity interest in the opportunity.