Pressure Technologies acquires Yorkshire manufacturer
PRESSURE Technologies has today announced a multi-million pound acquisition.
The Sheffield-based manufacturer, which runs engineered products, cylinder and alternative energy divisions, has acquired Rotherham-based Roota Engineering for £13.5m.
Pressure Technologies is acquiring Roota, which manufactures bespoke engineered products for the oil and gas industry, for £9m in cash and up to £4.5m in deferred payments based on its future performance.
The company is funding the deal through a share placing to raise £16.7m through the issue of 2.9m new shares priced at 575p.
John Hayward, chief executive of Pressure Technologies, said: “Roota is an ideal acquisition for Pressure Technologies and the support and enthusiasm of both existing and new investors for the deal are testament to this. Roota is profitable, operates in markets we know well and we believe the acquisition will be earnings enhancing. In addition, the business is located just two miles from the group’s head office, making it ideally located for a seamless integration with the enlarged group.
“It has been our long-stated strategy to grow the group both organically and through acquisition. Roota gives us the opportunity to enhance our position in the specialist engineering supply chain to the oil and gas industry. Together with Al-Met, we will have two of the UK’s premier, niche component manufacturers respected for both their highly skilled workforce and customer service.”
Founded in 1973, Roota has modern manufacturing facilities, located close to Pressure Technologies’ existing cylinder business. Roota has 35 employees and upon completion of the acquisition the key members of Roota’s management, Matthew Crampin and Nicholas Crampin, will remain with the enlarged business, retaining their long standing roles as managing director and production manager, respectively, of Roota. For the year ended 30 November 2013, Roota reported revenues of £8.m and pre-tax profit £2.6m. As at November 30 2013, Roota had net assets of £4.4m.
Pressure said it is acquiring a highly complementary business, selling into markets of which the group has a detailed understanding. It added that the acquisition will dovetail with Pressure Technologies’ subsidiary Al-Met Limited, as the business serves the same oil and gas market and produces similar, albeit larger and more complex products.
Pressure added: “The acquisition is an obvious strong strategic fit with Pressure Technologies’ growth strategy and the Directors believe that Roota will have exceptional long term growth prospects as part of Pressure Technologies.”
In December, Pressure said it is planning a major investment strategy over the next two years as it announced record results. The business saw group sales for the full-year reach a record £34.4m, up from £30.4m in 2012, which yielded a pre-tax profit of £2.9m (2012: £1.8m), giving a return on sales of 8.4%.
In an update to the markets earlier this year, Pressure said it expects its performance for the year to be “at least in line” with market forecasts after reporting a positive start. At the end of January 2014, the total orders on hand were 39% higher than at the start of the current financial year and 100% higher than at the end of January 2013.
