Industrials sector comment – October 2010

Date

The bidding war for another UK industrial asset has drawn to a conclusion. Cooper Industries Inc, the $5bn US industrial group, has succeeded with its £19.2m offer for Mount Engineering plc, the AIM-listed manufacturer of actuators, fittings and valves for the oil and gas industry.

The safety-critical nature of Mount’s Hi-Flow Valves, Raxton and Redapt businesses had previously attracted the attention of Redhall Group plc, the AIM-listed group focused on engineering services for the defence, energy and process industries. Redhall had offered £16.4m for Mount is part of its on-going buy-and-build programme involving providers of engineered products and services to the energy industries. Cooper is a manufacturer of explosion-proof electrical equipment through its Cooper Safety division. The group has a continual programme of acquisitions focused on building key platforms such as Cooper Safety and improving its geographic penetration in its core markets, which include oil and gas. The group sees value in completing its own electrical safety equipment with Mount’s mechanical products for safety-critical applications.

Meanwhile, the focus on UK engineering and manufacturing companies has intensified with Wellstream Holdings plc the subject of an approach from General Electric Co. Wellstream is a manufacturer of flexible pipelines for the oil and gas industry. The US industrial giant, which has just completed the £1.9bn acquisition of US heavy engine manufacturer Dresser Inc, has had two approaches rejected. GE’s latest offer for Wellstream values the group at £755m. Speculation is now mounting that this process will also become competitive with China Oilfield Services Ltd, FMC Technologies Inc and National Oilwell Varco Inc all seen as credible bidders.

Deals

Diploma plc has acquired All Seals Inc a US supplier of O-rings and custom moulded seals for the aerospace, agriculture, manufacturing and medical industries. The £7.8m acquisition will be integrated into Diploma’s Hercules Fluid Power Group. Diploma has also acquired an 80% stake in Big Green Surgical Co Pty Ltd, an Australian distributor of healthcare and medical products.

Falcon PCB Group Ltd has acquired Artetch Circuits Ltd, a UK manufacturer of printed electronic circuit boards. Artetch Circuits will be renamed Merlin Artetch Ltd.

RPS Group plc has acquired Boyd Exploration Consultants Ltd, a Canadian provider of consulting and project management services for the mining and oil and gas industries. The £8m acquisition will reinforce RPS’s services for the Canadian oil and gas industry and provide the group with access to the mining industry, particularly the potash mining sector.

UK Aluminium Tubes Ltd has acquired Beasmart Aluminium Tubes Ltd, a UK manufacturer of seam-welded aluminium tubing. Beasmart Aluminium Tubes was acquired from administration.

UK private equity firm Nevis Capital has acquired Dieselec Generators Ltd, a UK manufacturer of prime and stand-by generators. Dieselec has manufacturing operations in Brazil, China, India, the UK and the USA.

GKN plc has acquired Grundfos NoNOx Holding AS (NoNOx) from Grundfos AS. NoNOx is a developer of elective catalytic reduction systems for diesel engines used in agricultural machinery, buses and coaches, commercial vehicles and construction vehicles. GKN has completed the acquisition through its Emitec GmbH joint-venture with Continental AG.

Atlas Copco AB has acquired H&F Drilling Supplies Ltd, a UK manufacturer and supplier of land-based drilling equipment. The target will be integrated into Atlas Copco’s Construction & Mining division.

BAE Systems plc has acquired the intelligent services business of L-1 Identity Solutions Inc. The £188m acquisition is a US provider of security and counter threat capabilities through its subsidiaries Advanced Concepts Inc, McClendon LLC and SpecTal LLC.

James Fisher and Sons plc has acquired Rigcool Ltd, a UK supplier of booster pumps and submersible pumps for the offshore drilling industry. The £4.1m acquisition complements James Fisher’s Scan Tech Air Supply division which will be enhanced by RigCool’s operations in Aberdeen and Australia.

John Wood Group plc has acquired a significant stake in SgurrEnergy Ltd, a UK provider of consulting engineering services to the renewable energy market. SgurrEnergy has operations in Canada, China, India, Ireland, France, the UK and the USA and focuses on consultancy, engineering and measurement services for wind farms and other renewable energy projects.