Renew to buy Amco in £19.8m deal
RENEW Holdings is to buy Barnsley engineering business Amco Group for £19.8m.
The reverse takeover by AIM-listed Renew will be funded out of cash holdings and a £15m loan from HSBC. Shareholders will be asked to approve the deal later this month.
Amco was the subject of a management buyout in 2008 backed by private equity house Endless and its turnover for 2010 is expected to be in excess of £75m.
Darren Forshaw, partner at Endless who led the deal, said: “Amco is an outstanding business and has been a first class investment for Endless, I feel privileged to have been involved in the successes of the past three years.
“Since the MBO, annual profits have increased more than threefold and the business has expanded its activity across all of its key markets, this at a time when most of its peers have experienced declining turnover and profits.”
Aidan Robson, investment director at Endless, added: “The success of Amco recently is no surprise when you see the quality of the management team and the attention to customer service. The business is well-positioned for future growth and Renew will be an ideal owner, providing the foundation and support to deliver the next phase of Amco’s development.”
Renew has been looking to grow its specialist engineering business and the acquisition of Amco will broaden the ragne of services it can provide.
Endless and Amco management were advised by Martin Jenkins and Barry Jackson from Deloitte with Neil Thompson at Hill Dickinson providing legal advice. Legal advice was provided to Endless by a team from Walker Morris led by Richard Naish.
Mr Jackson said: “This is a completely Yorkshire centric deal with all principals and advisers based in the region. We were tasked with finding the right buyer for this very strong Yorkshire business in what still remain challenging market conditions.
“The acquisition demonstrates that good quality deals are getting done and is another indicator that activity is gradually increasing in the M&A markets.
“The success of Amco since the buyout represents a great example of value creation through management and private equity working together and, having identified Renew as the ideal strategic acquirer of the business it is great to see this deal announced.”
Brian May, chief executive of Renew, said: “We are delighted to welcome the staff and management of Amco to the Renew group.
“The acquisition of Amco allows Renew to increase and broaden the scale of its specialist engineering operations, as well as adding to the range of services we can provide to our customers. Amco has a strong and highly experienced management team and I look forward to working with them in the future.”
Renew was advised by Sandy Fraser and Sean Wyndham-Quin from Brewin Dolphin. DLA Piper was the legal adviser and KPMG performed the financial due diligence.
Mr Wyndham-Quin said: “Throughout the recent recession, Renew’s specialist engineering business has continued to grow organically demonstrating the quality and resilience of the specialist sectors in which Renew operates.
“This acquisition is firmly in line with the group’s stated strategy and achieves the board’s objective of delivering in excess of 50% of group revenue from specialist engineering by 2012.”
