£135m cash cut as ClydeUnion deal is revised

SPX Corporation, based in North Carolina, will reduce the cash element in the £750 million deal, announced in August, from £700m to £565m with the rest made up of earn-out payments based on earnings projections.

Representatives of SPX are due in Glasgow on Thursday to complete the deal and the revised terms are not expected to have any bearing on the outcome or on the overall agreed price.

Christopher Kearney, chairman, president and chief executive of SPX, confirmed the renegotiated terms at an analysts briefing in the US.

He said: “We amended the agreement to better align the timing of our purchase price payments with ClydeUnion’s revised 2011 projections and those projections include estimated revenue of about $580m [£374m] and estimated EBITDA of approximately $80m.

“Under the amended agreement, we’ve agreed to pay about $900m at closing, and we’ll have earn-out opportunities in the aggregate of about $300m based on Clyde’s actual EBITDA performance.

McColl, the country’s richest man, sold the former Weir pumps business four years after acquiring it for £45m when it was expected to be sold to Swiss firm Sulzer. He started at the company as an apprentice.

Under his stewardship, profits have risen tenfold while the headcount now numbers more than 2,000, 900 of whom are at the firm’s Cathcart headquarters.

After announcing the sale to SPX he declined to say how much he was pocketing from the sale proceeds, describing it only as “a big number”. Several parties, including members of the management team, will share in the windfall. He declined to comment on the revised terms of the sale.

McColl, who secured guarantees from SPX on the jobs at ClydeUnion, said he wanted to use the proceeds for further acquisitions.

His mostly likely targets are UK, European and North American industrial companies with good growth potential in sectors related to oil and gas, chemicals and water treatment.