String of deals as Clyde aims to triple in size

Published on 07/06/2010 21:02

CLYDE Blowers, the £1 billion engineering group headed by Scottish entrepreneur Jim McColl, will today announce the first in a series of acquisitions aimed at trebling the company's size within the next three to five years.

• Jim McColl. Chairman of Clyde Blowers. Picture: Robert Perry

McColl, who took the group private in 1999, said he was currently talking to venture capitalists about raising a second acquisition fund like the one put together in 2008 for the $1bn (690m) purchase of assets from US giant Textron.

The new fund is aiming to raise between 350m and 500m, against 225m last time.

About 40 per cent of the new fund would be used to finance a deal like Textron, said McColl, who would like to have this acquisition and the necessary funds in place within the next nine to 12 months.

He is currently seeking takeover targets that provide "mission critical" products and services, rather than relying on discretionary spending.

This would come on top of a string of deals already nearing completion, including today's announcement of the 125m merger of Clyde's Maag Pump Systems with Germany's Automatik Plastic Machinery.

Swiss-based Maag, acquired as part of the Textron deal, specialises in the manufacture of plastic pumps for industrial use. Automatik makes the raw material for use in plastic production.

The Clyde Blowers Fund will own slightly more than half of the merged Maag Automatik, which McColl expects to benefit from a 50 per uplift in sales by 2012. The operations currently have a combined turnover of about 82.5m.

"We expect this to be a case of one plus one equalling three," McColl said.

He is now looking for a third element to add to the Maag Automatik mix, and has his eye on two possible targets in the US. He hopes to have this deal, plus a separate joint venture operation in China, sealed by the end of this year.

Elsewhere within the group, Clyde is in the process of due diligence to further bolster Clyde Union, the business that includes the Glasgow-based operations of Weir Pumps. He goes to Houston, Texas, next month to further those talks.

Meanwhile, the group's DB Gear Systems business is within days of unveiling a joint venture with a US partner in the offshore wind sector. This will see the establishment of a new manufacturing facility in the UK, most probably in Scotland.

"We have got some fantastic opportunities in the wind sector," McColl said. "This is quite exciting, both for us and for Scottish manufacturing in general."

McColl is examining possible ways to boost the value of Clyde Process Solutions, one of only two quoted businesses within the group. He has been dismayed by the lowly value attached to Aim-listed CPS, which last month posted a 6 per cent rise in operating profits before exceptional items.

"We are not going to be having this discussion next year, because one way or the other, we are going to have this resolved by then," McColl said.