West Midlands corporate deals review in association with Clearwater International
By Gareth Iley, partner at Clearwater International
June saw a drop in the level of Midlands deal activity; as M&A slowed down as we moved into the summer months, as the country became obsessed with Brexit. 23 took place in total in June a decrease from the 29 recorded in May. June was a strong month for industrial and consumer deals; which made up over half of all transactions.
American buyers calling
Walsall based Truflow Hydraulic Components was acquired by Cleveland based Brennan Industries. Brennan used the acquisition as a route to entry for the UK market and as a base to significantly focus on increasing European sales. Truflow hopes to use the investment to expand its existing product range and cement its business growth.
Halesowen based DotNet IT was acquired by US software giant Epicor. DotNet IT was already an Epicor channel partner and specialises in the implementation of Epicor’s ERP software. EPICOR acquired the business as a key part of its cloud strategy; as DotNet IT creates SaaS based add-on solutions for its ERP platform.
Furthermore American private equity firm PNC Riverarch capital invested in Stoke based ceramics group Steelite International. PNC supported Steelite’s MBO of the business by its America’s division president John Miles. The deal marks an exit from the business for former CEO Kevin Oakes; who has decided to continue his interest in Midlands businesses by investing in Royal Crown Derby.
It is really positive to see how Midlands businesses across a number of industries are appealing to big American corporates, who recognise their growth potential. Despite Brexit, US buyers have capital to invest and are now enjoying more favourable exchange rates.
Domestic acquirers still active
Midlands businesses also made attractive targets for UK buyers. Midlands based Colliers Group was acquired by Jardine Motors for £17 million. Colliers runs a number of car franchises selling Jaguar, Land Rover, Honda, Nissan and Mazda in the Midlands with a combined turnover of £80 million. The deal was driven by Jaguar Land Rover’s push for a common ownership model. Jardine Motors has already established a significant presence in the region, with plans to create 70 new jobs
Birmingham based Glide appeared in the London Stock Exchange’s 1000 companies to inspire Britain and is a real example of Midlands based innovation. It has a simple premise of providing one monthly bill for all utilities and services to multitenancy properties. It was acquired by CableCom a student broadband business. Glide has real potential to be a significant disruptor in the student and shared housing market. Midlands businesses look outwards
Midlands businesses also looked for growth through M&A, as they largely focused on targets within their own industry verticals. Burton on Trent based Palletforce acquired QTR Transport as it continues to invest heavily in the development of its logistics network. QTR is based in Newbury a strategically advantageous position for access to the Midlands and West London. The acquisition is the second for Palletforce this year and provides the company with vital infrastructure. In the future it could allow the business to create a southern hub.
Equally, tubing and related products supplier Marla Tube Fittings, acquired Steadfast Engineering Company. Steadfast Engineering is a manufacturer of pipeline components for the international oil and gas market. Alcester based Marla wants to build on Steadfast’s strong revenue growth and impressive international trading; as it looks to expand its presence in the oil and gas market.
The key challenges for M&A over the coming months will be overcoming the uncertainty of Brexit, which we will look to report on in the review of July and August deals.
