Swedish manufacturer Trelleborg AB is entering a new business through its pending purchase of Smiths Group plc's Polymer Sealing Group, while continuing the search for more acquisitions.
Trelleborg announced July 21 it will buy Smiths' sealing unit for 495 million ($791.3 million), one of the remaining components of auto and industrial production for London-based Smiths. The deal is to close by mid-September.
The sealing unit has annual sales of 378 million ($604.3 million), with customers in the automotive, industrial, pipe and aerospace markets. The group includes production of polyurethane, polytetrafluoroethylene and rubber gaskets, seals and O-rings sold under the Busak+Shamban, Dowty, Shamban and Forsheda market names. The businesses were developed under TI Group plc, which merged with Smiths Industries plc in 2000. The combined Smiths Group wants to focus on detection, medical and aerospace sales.
The Trelleborg-based company has no sealing specialties now, but the purchase from Smiths will bring it automatically to the forefront, Chief Executive Officer Fredrik Arp said during a July 21 news conference.
``You can't go into such an area buying something small,'' he said. ``The only way is to buy an existing, substantial platform, and that is what we have done. We have focused on attractive polymer-related businesses for the past three or four years. We believe [Polymer Sealing Group] contains all the good things we like.''
To back up the sealing systems' offerings, Trelleborg will seek acquisitions to fill product or geographic gaps.
The PSG acquisition is Trelleborg's second in the past eight months. In December, the firm purchased Seaward International Inc., a Clearbrook, Va.-based producer of polyethylene and polyurethane marine buoys and fenders.
The Smiths business will operate as a unit within Trelleborg, joining its existing automotive unit - which focuses on vibration control - wheel systems, building systems and engineered systems. It has 6,000 employees and 27 manufacturing sites globally, including six in North America.
It operates as a second-tier supplier to the auto industry, typically providing systems for automotive and brake systems producers. PSS claims about 6 percent of the automotive seals market in Europe and 5 percent of the North American auto sealing market. In industrial sales, it holds 20 percent of the European market and 5 percent in North America, while in aerospace it has 23 percent of the European and 9 percent of the North American market.
The group had operating profit of 45 million ($71.9 million) in 2002.