A long story came full circle to a conclusion this week, as Jim McColl, the Scottish entrepreneur who leads Clyde Blowers Capital, announces the sale of Clyde Union Pumps (the amalgamation of Weir Pumps and Union Pumps, originally of the USA to the SPX Corporation, an American Fortune 500 Company. Jim McColl is therefore selling the business where he started as an apprentice, that he rescued by acquiring it from the Weir Group in 2007.
The current sale to SPX
Clyde Union will continue to be run as a standalone business with a head office in Glasgow, under the leadership of the same management team.
SPX has agreed to acquire Clyde Union for a headline price of GBP750m ($1.25bn). Of this, GBP700m will be in cash at completion and GBP50m is subject to an earn-out agreement, based on future performance.
North Carolina-headquartered SPX is a publicly-traded multi-industry global engineering solutions company with annual revenues of $5.5bn, employing over 15,000 people in 35 countries.
Clyde Union was formed under the direction of Clyde Blowers Capital chairman and chief executive Jim McColl out of two major acquisitions – the GBP48m purchase of the former Weir Pumps business in Cathcart, Glasgow from the Weir Group in May 2007, and then the acquisition of Union Pumps as part of a $1Bn deal with another Fortune 500 company, Textron, the following year.
Clyde Union has grown rapidly, and now manufactures in seven countries with 25 service centres worldwide. Only two weeks ago they announced what McColl described as “continuing impressive growth” for the year 2010 – with profit increased by 28% and orders up 18%. Employee numbers have increased to 2,037 – almost 900 of these at Cathcart. Clyde Union Pumps is structured into seven customer focused business units. These business units focus their expertise separately on the six main markets for centrifugal and reciprocating pumps: upstream oil, downstream oil, nuclear power, conventional power, water and industrial, minerals and mining sectors, plus there is an aftermarket service and support business.
Promises made at the start of Clyde Union in 2007
The results are even more remarkable when compared to the figures at the time of the Weir Pumps acquisition. The three years to the end of 2010 have seen an almost tenfold increase in profit (EBITDA) from GBP4.5m to GBP40.1m, with a rise in turnover from GBP44.7m to GBP259.9m for the same period, rising to over £400m projected for the current year. Jim McColl will play no part in Clyde Union after the sale. He today joined his senior management team in holding a series of information meetings with Cathcart employees and other workers around the globe as they arrived for their various shifts. Commenting on the decision to sell the former Weir Pumps business, where his career started as an apprentice at the age of 16, McColl said:
“Our success over the past four years has created a lot of interest in Clyde Union Pumps, and we have had many enquiries about the business. Until now, our response has consistently been that the company was not for sale, because we still saw significant growth opportunities and were firmly focused on delivering the growth strategy which we had put in place.
“However, earlier this year we were approached by SPX, who were very keen to talk to us about acquiring the business.
“Since then we have been in discussions with SPX management and have reached an agreement for them to acquire Clyde Union.
“A very important part of our discussions has centred around us being convinced that SPX would be a good responsible owner of this business and would continue to support its growth. As a very large corporation, we firmly believe SPX can provide that investment and be a safe custodian of our business going forward.
“But this is about more than money. I went to America personally to meet the Chairman and Chief Executive and to satisfy myself that they were committed to growing Clyde Union, and that was a key part of my due diligence.
“I made it clear to them that I had more invested in the company than just money. I told them I had strong emotional investment, and I genuinely wanted to see the business and the employees go on and prosper.
“I would not have sold Clyde Union to anyone who wouldn’t take the company to the next level. There had to be a long-term commitment.
“When we bought Weir Pumps from the Weir Group and saved it from almost certain closure, we made certain promises, all of which have been kept. I’m proud of that.
“We promised to retain and grow the workforce – we have increased the staff from 535 to 891 at Cathcart, and to 2,037 globally, all high-level jobs.
“We promised to take on apprentices – we have taken on over 100, including 22 this year.
“We promised to grow the business – we have increased turnover from GBP44.7m to over GBP400m in the current year.
“We recently committed to buy the site at Cathcart from Weir Group for GBP25m, which was important for the long term stability of the company, and we have invested cash in new machines and new test facilities at the site.
“My goal at the start was to take a company that was on the brink of closure when we bought it and rebuild it into the world-class business that it once was and should be.
“We’ve created a world-class business headquartered in Glasgow with a world class facility, and really good people. We’ve also put in place the infrastructure for education and life-long learning – the ability for people to upskill, to better themselves in their earning capacity.
“We also leave Clyde Union with a very healthy order book, and in the ownership of a trusted buyer that will take it to the next level.
“The only regret is that I won’t be part of that journey, and in a personal sense, that is the sad part.”
The vision from SPX
Clyde Union will be part of SPX’s Flow Technology business, the largest and most profitable part of the corporation, which brings in $2Bn in annual revenue.
Don Canterna, President of SPX Flow Technology said: “Our board of directors and senior management are very committed to the Flow Technology segment and growing it through both organic initiatives and acquisition opportunities.
“SPX has a very strong track record of successful acquisitions and we have demonstrated an ability to repeatedly create value by partnering with high quality companies like Clyde Union Pumps, which will bring Flow Technology critical mass in the power and energy sectors and will serve as a platform for future growth in these markets.”
“We see tremendous value in Clyde Union’s products, brands, factories, and most importantly, its people. Americans know and respect Glasgow and Scotland’s place in engineering heritage.”
“Our current SPX Flow Technology product portfolio has a niche position in power & energy markets through well-recognized pump brands including Bran & Luebbe and Plenty Mirrlees, as well as our Copes-Vulcan and M&J valve brands. The acquisition of Clyde Union will expand our niche market position and create a global power and energy platform for SPX Flow Technology.”
“The company under Jim McColl has experienced very impressive growth and SPX is committed to investing in Clyde Union in order to ensure continued growth in the future. We firmly believe in its current, long-term strategic plan and will work together with existing management to continue this plan going forward.”
“We are confident that SPX’s global footprint, financial wherewithal, and industry relationships will provide additional resources for growth to Clyde Union. We are here for the long-term, and we believe we are the ideal owner for this business.”
The 2007 deal with Textron for Union Pumps
Clyde Bowers acquired various businesses from Textron, an American Fortune 500 company, in September 2008, in a deal with a total value of $1Billion. Four separate businesses were acquired, these businesses previously making up the Textron Fluid and Power Division. These were:
1) Maag Pumps systems – Based in Oberglatt, Switzerland, a global provider of highly engineered polymer and compounding pumps, extrusion pumps, screen changers, filtration systems and high end industrial pumps. Maag has approximately 275 employees at eight locations in seven countries.
2) David Brown Gear Systems – Based in Huddersfield, England, a leading provider of gearing solutions to large and growing industries, including defence, mining, metals and minerals, power, cement, oil & gas, food and beverage. It employs 1,113 employees at 18 locations in 11 countries.
3) David Brown Hydraulics – Based in Poole, England, a niche provider of Hydraulic Pumps, motors, valves and power take off units. The product line primarily targets industrial and defence original equipment manufacturers (OEMs) and small to medium sized OEMs which do not have in-house hydraulics expertise, differentiating itself through support in design and optimisation of the entire hydraulic system within its customers’ products. DB Hydraulics outsources most of its manufacturing. With 119 employees at 10 facilities located in nine countries, DB Hydraulics has global design, services and supply chain capabilities.
4) Union Pumps – Based in Battle Creek, Michigan, US, a global producer of highly engineered centrifugal and reciprocating pumps and associated aftermarket parts and services. The company supplies pump solutions to the nuclear power, petrochemical processing, desalination and industrial markets. Union Pumps has approximately 730 employees at 10 locations in six countries – including the US, Canada, France and Yorkshire in England.
Three of the four companies acquired – Maag Pumps, David Brown Gear Systems and David Brown Hydraulics – were planned to be separate portfolio companies within the Clyde Blowers group, which also comprised Clyde Process Solutions, Clyde Bergemann Power Group, InterBulk Group and Clyde Pumps.
Union Pumps was to be integrated with Clyde Pumps – where McColl (55) started his working life as a 16-year-old apprentice engineer. The McColl purchase of Clyde Pumps saved 600 jobs, as Weir Group had planned the sale of Weir Pumps to Swiss company Sulzer, whose intention was to close the Glasgow plant.
Together, the companies will offer a comprehensive range of centrifugal and reciprocating pumps for the conventional power, nuclear power, downstream oil & gas, upstream oil & gas, water and industrial markets, including desalination, as well as a comprehensive range of after market services.
Both companies have a strong heritage, with Union dating back to 1885 and Clyde Pumps, incorporating Weir Pumps, dating back to 1871. The companies have a combined rich brand heritage including brands such as Weir Pumps, Mather & Platt, Girdlestone, David Brown Pumps, Union Pump and Pompes Guinard – and enjoy a loyal customer base of major contractors and end users.
Jim McColl said: “The integration of these two businesses together with an exciting Clyde Pumps joint venture with WPIL (formerly Worthington Pump India Ltd), and a joint venture in China which is expected to be finalised by the end of October, will create a new global pumps business capable of competing effectively in several high growth, high margin markets.”
The transformation in 18 months of the Weir Pumps business, as acquired by Clyde Blowers, from a single site business based in Glasgow, to a truly global company with the products, scope and scale to serve all its customers across the globe, was a key driver for this acquisition. Now that this has been achieved, a detailed plan to integrate the two businesses, which had been worked on for several months, will be put into action. For Clyde Blowers, which then had just under 5000 employees throughout the world, these acquisitions took turnover for all companies to a total of GBP1.2 billion.
|Clyde Union Pumps has at its base the two companies Clyde Pumps and Union Pump. Both have a rich heritage and a combined history of almost 300 years.Clyde Pumps
In 1871, two brothers, George and James Weir, founded the engineering firm of G. & J. Weir. From their Glasgow works, in Scotland’s central belt, they quickly established a reputation for inventing pump and valve technologies that were utilised successfully on ship engines, oil pipelines, desalination plants and power stations across the world.
On Tuesday 8th May 2007, over 135 years after the Weir brothers founded their business, Jim McColl (chairman and chief executive of Clyde Blowers) announced the acquisition of the Weir Pumps (Glasgow) business from the Weir Group plc. As a result of this transaction, the diverse portfolio of technologies, process knowledge and expertise generated by Weir Pumps was incorporated into a newly created company, Clyde Pumps Ltd.
Weir Pumps combines the well known brands of Weir, Mather & Platt, Drysdale, WH Allen, Girdlestone, Allen Gwynnes and Harland.
Union Pump has an equally interesting history, bringing together various heritage products and skills that were fully incorporated into Clyde Union Pumps.
Since Union’s inception in 1885 in Michigan, USA the company has been creating class leading pumps for industries around the globe. Union have incorporated the David Brown Pumps brand as well as its significant capabilities when their Annecy, France, operation was acquired, and along with it the respected DB Guinard Pumps brand.
Union Pumps brands include Union Pump, David Brown Pumps, DB Guinard Pumps, American Pump, and Pumpline.
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