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Scots entrepreneur buys David Brown in $1bn deal

12 September, 2008

Clyde Blowers, the East Kilbride-based group owned by Scottish entrepreneur Jim McColl, is buying Textron’s Fluid & Power Division, which consists of UK-based David Brown Gear Systems and David Brown Hydraulics, as well as the Swiss pump-maker Maag and US-based Union Pumps.

The deal will double Clyde Blowers’ global its workforce to around 5,000 and take its turnover from £700m to around £1.2bn. The acquired businesses are expected to generate about $675m in revenues this year.

Jim McColl

McColl (above) plans to integrate Union Pumps with Clyde Pumps, the company he formed last year following his purchase of Weir Pumps – the company where he started his working life as a 16-year-old apprentice engineer, almost 40 years ago.

"I am absolutely delighted to sign a deal of this magnitude, especially in the current economic climate," says McColl. "We are talking a total value of $1bn, including additional working capital, bonding facilities, the integration with Union Pumps of the Weir Pumps business and payment of up to $645m to Textron. It is a very substantial deal for a British company.

"I believe it is a great boost for British business," he adds. "At a time when the news is all about foreign businesses coming to the UK and buying our biggest companies, here is a story of a British company having the clout to buy an entire division from a global company ranked 202nd in the American Fortune 500."

Huddersfield-based David Brown Gear Systems employs 1,113 employees at 18 locations in 11 countries. It produces gearboxes and gearmotors, as well as worm gears and transmission systems. It has two sister operations: Swedish-based Benzlers, which makes worm gears, screwjacks, shaft-mounting reducers and geared motors; and US-based Cone Drive, which claims to be the world leader in double enveloping worm gear technology, as well as producing helicoidal worm gears.

The other acquired businesses are:

• Poole-based David Brown Hydraulics which supplies hydraulic pumps, motors, valves and power take-off units targeted primarily at industrial and defence OEMs and small-to-medium OEMs which do not have in-house hydraulics expertise. DB Hydraulics, which outsources most of its manufacturing, has 119 employees at ten facilities in nine countries;

• Maag Pumps, located in Switzerland, which supplies highly engineered polymer and compounding pumps, extrusion pumps, screen changers, filtration systems and high end industrial pumps, and has around 275 employees at eight locations in seven countries; and

• Michigan-based Union Pumps which produces centrifugal and reciprocating pumps and associated aftermarket parts and services and has around 730 employees at ten locations in six countries, including the US, Canada, France and Yorkshire in the UK.

"Each of the acquired businesses has its own top quality management team," McColl says. "We look forward to working with our new colleagues to help them realise the tremendous potential in all of these businesses."

Three of the four acquired companies – the Maag and the David Brown operations – will be separate portfolio companies within the Clyde Blowers group, taking the number of such organisations to seven, each with its own management structure. The others are Clyde Process Solutions, Clyde Bergemann Power Group, InterBulk Group and Clyde Pumps.

McColl plans to combine the Union and Weir pumps businesses with the aim of becoming the world’s number three supplier of large centrifugal and reciprocating pumps, behind Sulzer and Flowserve.

"The integration of these two businesses together with an exciting Clyde Pumps joint venture with WPIL (formerly Worthington Pump India), and a joint venture in China which is expected to be finalised by the end of October, will create a new global pumps business capable of competing effectively in several high growth, high margin markets," says McColl.

"The transformation in 18 months of the Weir Pumps business, which was acquired by Clyde Blowers from a single site business based in Glasgow, to a truly global company with the products, scope and scale to serve all its customers across the globe, was a key driver for this acquisition," he adds. "Now that this has been achieved, a detailed plan to integrate the two businesses, which has been worked on for several months, will be put into action."

The sale marks Textron`s exit from the pump and power transmission industries. Textron, which owns the Cessna aircraft and Bell helicopter companies, will receive around $526m in cash from the deal.

"This is a very positive move for both parties, as well as a great fit for employees," says Textron’s president, Lewis Campbell. "Clyde Blowers is gaining world-class operations with Textron’s Fluid & Power group of companies, including some of the most advanced technologies, respected brands and highly talented people in their respective industries, while we continue to strategically focus our portfolio of businesses to deliver even more meaningful value growth, profitability and shareholder return."

 




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