Corporate Developments
Bodycote International PLC
03 November 2006
PRESS RELEASE
EMBARGOED UNTIL 0700 HOURS 3 NOVEMBER 2006
Bodycote Corporate Developments
Bodycote International plc, the specialist thermal processing and testing
services company, is pleased to announce further progress in the implementation
of its stated corporate strategy. As we are now late in the year, these
acquisitions will not have a significant impact on 2006 sales and profits. The
Group has acquired six new businesses: -
- Brasimet, the market leading metallurgical services company with six plants
in Brazil
- Consult-us, a County Cork based analytical chemistry and microbiology
laboratory
- Prova, a Camberley situated pharmaceutical testing laboratory
- Foodscan, a food analysis and microbiological testing company based in Glasgow
- Norpath, a County Durham food and consumer products testing business
- ISTAS (60% equity stake), Turkey's largest heat treatment group
These investments advance Bodycote's strategy of expanding its Thermal
Processing strategic business unit (SBU) into emerging economies and increasing
the scale of its Testing SBU. The total cash consideration for the six
acquisitions is £25.0m, with forecast 2006 sales of £31.8m and net assets of
£10.9m. As we are in November, these acquisitions will not have a significant
impact on 2006 sales and profits. The multiples paid remain within the
previously indicated target range. In addition Bodycote has sold its Espoo,
Finland coatings plant, which had sales of £1.1m in 2005.
In 2007 Bodycote will also invest approximately £12m in heat treatment and
testing greenfield start-ups in India, Singapore and Mexico to increase its
geographical reach and help realise its strategy for growth in emerging
economies. This expenditure is in addition to the previously announced
investment in Wuxi, China and will be accommodated within previously indicated
levels for capital spending by Bodycote in 2007.
Bodycote expands into emerging markets (Brazil, Turkey, India, Singapore,
Mexico, China)
Brazil - Brasimet
Bodycote has acquired Brasimet Comercio e Industria S.A., the premier
metallurgical services company in Brazil, offering heat treatment, brazing, PVD
coatings and testing services from six facilities. This acquisition will expand
Bodycote's network into the major industrial centre for South America. Brazil
has a cluster of automotive and aerospace industries, including many of
Bodycote's existing global customers.
Turkey - ISTAS
Bodycote has completed the acquisition of 60% of the equity of ISTAS, Turkey's
leading heat treatment business, which has facilities in Istanbul (2), Izmir,
Bursa, Ankara and Adana. ISTAS is ideally placed to service the growing number
of engineering manufacturers moving to Turkey and provides Bodycote with a
footprint in an important developing market.
India - Pune
Bodycote announces the launch of an initial investment in India comprising a
greenfield production facility with heat treatment and metallurgical testing
capabilities in Pune, which will be the largest full service commercial heat
treatment facility in India.
Bodycote's rationale for entering the Indian market is principally driven by the
existing Western customer portfolio and also by the strong growth of Indian
economy which is currently running at over 9% per annum. Bodycote intends to
continue its controlled expansion in India by adding five further facilities by
2011 to service the main manufacturing regions.
Singapore - Thermal Spray Coatings and Testing
Bodycote acquired Ceramet Plasma Coatings Limited, a leading supplier of thermal
spray coatings, in April 2006. Bodycote is now establishing a facility in
Singapore to provide these coatings for critical valves and rotors used in the
oil and gas industry. Singapore is the Asian centre for oil rig construction
and refurbishment.
In the same facility Bodycote Testing will establish a laboratory to service its
global oil and gas client base providing a full scope of metallurgical,
forensic, corrosion, fracture mechanics and analytical testing capability.
Mexico - Heat Treatment and Testing
Bodycote is currently establishing a leading-edge technology centre for low
pressure carburising (LPC) heat treatment in Silao, Mexico initially to support
next generation GM transmission production in central Mexico. This follows on
from a successful LPC investment in Livonia, Michigan.
In addition Bodycote Testing has been awarded an outsourcing contract and is
establishing a new laboratory to supply FRISA with materials testing services
for its aerospace activities in Monterrey, Mexico.
China - Heat Treatment and Testing
Initial production has commenced in the Wuxi facility and is expected to be at
sales of £3m in 2008. An increasing number of Bodycote's global aerospace and
automotive customers have expressed interest in services from this facility.
Bodycote plans to continue its controlled growth in China by adding five new
facilities over the next five years.
In addition the Testing SBU is evaluating various opportunities to establish
service capability in China.
Testing - acquisitions provide further scale
Consult-Us
Bodycote has acquired Consult-Us, based in County Cork, Ireland. Consult-Us is
an analytical chemistry and microbiology laboratory that provides testing
services to a wide range of food and environmental customers throughout Ireland.
The acquisition means Bodycote Testing is able to offer its customers localised
services over a wider geographic area.
Prova
Bodycote has acquired Prova, a pharmaceutical development laboratory based in
Camberley, UK. The acquisition strengthens Bodycote's offer in the
pharmaceutical industry with the addition of pre-formulation, formulation and
regulatory services in the areas of licence applications, preparation of drug
master files, technical files and quality summaries. Prova also takes Bodycote
into the biotechnology market. The addition of regulatory advisory services will
provide additional support to the existing Bodycote pharmaceutical client base.
Foodscan
Bodycote has acquired Glasgow based Foodscan Laboratories, which carries out
chemical food analysis and microbiological testing for food manufacturers and
retailers.
Norpath
Bodycote has acquired Norpath Laboratories, based in County Durham. Norpath is
an analytical laboratory that provides research and consultancy services to a
wide range of food and consumer products clients throughout the UK and Europe.
These Testing acquisitions contribute to the strategy of expanding Bodycote's
Health Sciences division both in the UK and internationally.
John Hubbard, Chief Executive of Bodycote International said:-
'We are pleased that an additional six companies have been acquired by Bodycote
and we extend a warm welcome to all the staff in these businesses. Along with
the greenfield start-ups we have made a significant advance in our strategy to
enter emerging markets with both Thermal Processing and Testing and to build the
scale of our Testing business.
Finally, we were delighted to be named winners of the 2006 Manchester Evening
News, Business of the Year Award at a ceremony yesterday evening'.
For further information, please contact:
Bodycote International PLC Tel +44 (0) 1625 505300
John D. Hubbard, Chief Executive
David Landless, Finance Director
Financial Dynamics Tel: +44 (0) 207 831 3113
Jon Simmons
James Ottignon
This information is provided by RNS
The company news service from the London Stock Exchange