Grant Thornton – Deal of the month
The August sun has been shining for exporters, says Jim Whittaker, corporate finance director, Grant Thornton Leeds.
UK holidaymakers who visited any euro denominated currency zone this summer are likely to have returned home with significantly less change in their pockets than in previous years.
The shadow of Brexit, and the resulting political and economic uncertainty in the UK, has driven sterling to an eight-year low against the euro. The pound has dropped some 15 percent since Brexit.
Sterling was last at this level in 2009. Back then, the weaker pound did little to help our trade imbalance, much to the dismay of UK exporters. But it’s worth remembering that it was the 15% devaluation of the pound when sterling was forced out of the ERM, almost exactly 25 years ago, that partly allowed the UK to emerge from a damaging recession. Then, the pound acted as our economic safety valve.
Today, unlike 2009, the global recovery is underway and appears to be gathering momentum in the eurozone. British exporters might therefore feel more hopeful that the current correction in the pound will at last feed through to strengthening orders.
Given all of this, it is no surprise that some of Yorkshire’s notable deals in August involved export driven or global businesses.
£40m+ turnover company, Cooper & Turner in Sheffield was acquired by Watermill Group, a US private investment firm, in a significant cross-border deal. Founded in the 1800s by Joseph and James Turner as a gun barrel manufacturer, Cooper & Turner is now one of Europe’s leading manufacturers of high strength fasteners for the wind energy, railway, tunnelling, oil and gas and structural engineering industries.
Watermill was attracted to Cooper & Turner’s global footprint and plans to accelerate its growth in the booming international wind sector, positioning the company as the world’s first, truly global, mission-critical fastener supplier.
Three days earlier, Endless announced that it had backed the management buy-out (MBO) of £22m-turnover, Sewtec Automation in Dewsbury.
Sewtec designs and engineers automated manufacturing and packaging systems for a customer base of global blue-chip companies, serving sectors including confectionery, food, pharmaceutical, personal care and tobacco.
Exports make up 85% of Sewtec’s sales. Like Cooper & Turner, Sewtec has fascinating heritage and started life at the end of the 19th century as the design and development department of the Singer Corporation, the historic manufacturer of sewing machines.
Earlier in the month saw a couple of interesting deals in the consumer retail space. Melton based Heron Foods was snapped up for £152m by listed discount retailer B&M Bargains. The following week, Bon Bon’s in Wetherby which supplies luxury confectionery to retailers, was acquired by wine merchant Lanchester Wine Cellars.
Returning to the global theme, a look at August deals cannot be complete without a mention of the Pelsis MBO backed by LDC.
Based in Knaresborough, Pelsis suppliers customers with branded pest control and washroom hygiene solutions in over 80 countries from its 11 worldwide operations. Founded in 1984, Pelsis has grown organically and by acquisition, with sales increasing ten-fold over the past 10 years.
We all know that predicting our future trading relationship with the EU post-Brexit is futile, and who can say if our predictions will be correct? But it is encouraging that strong investor interest remains in quality Yorkshire businesses, particularly those exporters who are now benefiting from a major pricing advantage against their global competitors.
