Industrials sector comment – November 2011

Date

Clearwater’s industrials team is pleased to have completed two transactions in the past month.

The £24m disposal of AW Flow Group Ltd to Hamworthy plc emphasises how deep sector knowledge is crucial is identifying purchasers for specialist manufacturing businesses. AW Flow Group is a manufacturer industrial valves with which Clearwater’s industrials team worked for a number of years in order to shape the business for a successful sale. Operating through its John Mills Valves, Leeds Valves, Robert Cort and Shipham Valves subsidiaries, AW Flow will reinforce AIM-listed Hamworthy’s portfolio of niche products for mission-critical applications in the marine, offshore and oil and gas industries. The group will merge the group with its Pumps Systems division to form a new division called Hamworthy Flow Solutions. As a result the group will be able to maximise the opportunities available to it in the desalination, LNG liquefaction and re-gasification, naval marine, offshore oil and gas, power generation, petrochemical processing and refining markets.

Clearwater’s expertise in industrial markets and global reach were crucial to the successful sale of PCL Air Technology Ltd to INDUS AG of Germany. PCL is a designer and manufacturer of tyre inflation, pneumatic and compressed air equipment. The company operates from its manufacturing base in the UK, as well as having operations in India and China. Clearwater’s industrials team identified INDUS as a key strategic purchaser. PCL is the ideal match for the group’s subsidiary Horn GmbH in terms of product range and market coverage. Furthermore, PCL’s existing presence in the fast-growing nitrogen tyre-inflation equipment markets in China, India and the USA added to Horn’s portfolio. As an example of the attraction of UK engineering expertise, Horn will also benefit from PCL’s considerable technology development, purchasing and product optimisation capabilities.

Deals

Klinger Holding Austria GmbH has acquired Acorn Seals Ltd, a UK supplier of hydraulic seals. The acquisition will extend the group’s presence in the UK and reinforce its offering for the offshore oil market.

RTI International Metals Inc has acquired the Forming division of Aeromet International plc for £21m. The division is a UK provider of diffusion bonding, fabrication, hot forming and super plastic forming services for the aerospace and defence markets. The business will complement the US group’s Tradco subsidiary and enable it to provide advanced downstream, value-added titanium fabrication services.

Hamworthy plc has acquired AW Flow Holdings Ltd, a UK manufacturer of specialist industrial valves. The £24m acquisition will add AW Flow’s well-known John Mills Valves, Leeds Valves, Robert Cort and Shipham Valves brands to Hamworthy’s portfolio and complement its existing range of industrial pumps in the group’s new Flow Solutions division.

Wabtec Corp has acquired Bearward Engineering Ltd, a UK manufacturer of cooling systems and related equipment for the power generation and other industrial markets. Bearward specialises in charge air coolers and radiators for the construction equipment, off-highway and power generation sectors. The acquisition will complement the US group’s existing thermal management products for the industrial cooling, power generation and rail markets.

Parsons Corp has acquired the Analytic Solutions division of Cobham plc for £220m. The unit is a provider of engineering and scientific services for the US missile defence and national security markets.

Arcadis NV has acquired EC Harris LLP, a UK provider of asset management and consulting engineering services. EC Harris specialises in advisory, cost consultancy, project and program management and transactional support services with a particular focus on the industrial, property, public infrastructure, transportation and water sectors.

Reservoir Group Ltd has acquired GeoSearch Logging Inc, a US provider of environmental and well logging services for the oil and gas industry. GeoSearch Logging will complement the group’s own surface logging operations within its Empirica business and reinforce its presence in the North American market. Reservoir Group is backed by US private equity firm SCF Partners.

Specialist Services Holdings Ltd has acquired Labtech Services Ltd and Oil Engineering Middle East Ltd from Global Energy Group Ltd. Specialist Services Holdings is a Dubai-based provider of contracting and engineering for the onshore and offshore oil and gas industry.

Sinclair Knight Merz Ltd (SKM) has acquired the Mouchel Rail division of Mouchel plc for £3.4m. Mouchel Rail is a provider of consulting, design and project management services for civil, signalling and structural engineering projects which will complement the Australian group’s existing consulting engineering services in the UK.

Global Energy Group Ltd (GEG) has acquired the Nigg fabrication yard from KBR Inc and the Wakelyn Trust for £10m. The acquisition will allow GEG to utilise the facility as a centre of excellence for hydrocarbon and renewables engineering services. At the same time, GEG has acquired a majority stake in Global Resources Network Ltd (GRN) for £13m. GRN is an Australian provider of manpower services for the oil and gas industry.

Horn GmbH has acquired Pneumatic Components Ltd (PCL), a UK manufacturer of pneumatic equipment for the tyre inflation market. PCL specialises in analogue and digital tyre inflation systems and has operations in China, the UK and the USA. Horn is backed by German industrial investor INDUS. The transaction provides an exit for UK industrial investor Rubicon Partners.

Kingspan Group plc has acquired Proven Energy Ltd from the administrator. Proven Energy is a UK developer of and manufacturer of wind turbines previously backed by the Low Carbon Accelerator fund.

B3 Cable Solutions Ltd has acquired Tri-Wire Ltd, a UK manufacturer of copper wire from Nexans SA. The group has also acquired Blue Helix Ltd, a UK manufacturer of copper and fibre optic cabling for broadcast, computer network, data centre, defence, government, rail, security, telecommunications and utility applications.

ICR Integrity Ltd, formerly Walker Technical Resources Ltd, has acquired North East Corrosion Engineers Ltd (NECE), a UK provider of specialist corrosion monitoring services. NECE specialises in corrosion monitoring, chemical monitoring and oilfield microbiology services for the oil and gas industry. ICR Integrity is backed by UK private equity firm Gresham Private Equity.

Russell Building Products Ltd has acquired Russell Roof Tiles Ltd from Cemex SA. Russell Roof Tiles is a manufacturer of cement roof tiles.

Hunting plc has acquired Specialty Supply LP, a US provider of precision engineering services for directional drilling applications in the oil and gas industry. The £20m acquisition will complement the group’s recent acquisitions of Titan Group Inc and WL Doffing LP.

UK private equity firm Sullivan Street Partners has acquired Taylor Continental Holdings Ltd, a UK manufacturer of recycling and waste containers. Sullivan Street Partners has completed the acquisition will the support of Oakfield Capital Partners and debt provider Indigo Capital. The transaction provides an exit for UK private equity firm ECI Partners.

IMI plc has acquired TH Jansen Armaturen GmbH (THJ), a German manufacturer of severe service valves and related flow control products. THJ focuses on isolation valves for the metals, petrochemical, power and water industries. The £17.5m acquisition will complement the group’s Zimmermann & Jansen subsidiary which was acquired in 2010.

Encon Ltd, a UK distributor of insulation products, has been the subject of a management buy-out from Wolseley plc. Encon specialises in fire protection and insulation products, as well as dry lining, partitioning and suspended ceilings.