JANUARY 2004 ISSN 1365-6937 www.filtsep.com
IONICS TO ACQUIRE ECOLOCHEM FOR US$338 MILLION Ionics Inc has signed a definitive agreement to acquire the mobile water treatment company Ecolochem Inc and its affiliated companies in a transaction with an estimated value of US$338 million. The takeover will result in Ionics having forecast 2004 combined revenues of around US$460 million. Ionics has agreed to pay US$200 million in cash and 4.91 million shares of Ionics common stock, valued at US$138 million, for the privately held company based in Norfolk, Virginia, USA. Ecolochem provides emergency short- and long-term mobile water treatment services to the power, petrochemical and other industries. For the year ended 30 September 2003, the firm had revenues of US$109 million and operating income of US$28 million, (excluding US$2.3 million in non-recurring charges). “This acquisition fits well with our strategy of building our recurring revenue business,” said Douglas Brown, Ionics’ CEO, adding that Ionics believed Ecolochem was wellpositioned to benefit from the market trend towards outsourcing water services.
Lyman Dickerson, Ecolochem’s president, will become one of two new Ionics directors, while continuing to run the Ecolochem business. He will also be named vice president of Ionics’ Water Systems Division. On a pro forma basis, Ionics expects the transaction to add around US$0.14 per share to its projected fiscal 2004 earnings before restructuring charges. On the same basis and excluding amortization of intangible assets, the transaction is expected to add approximately US$0.31 per share. The acquisition, expected to close in early 2004, is subject to Hart-Scott-Rodino Act review, approval by Ionics shareholders, and other customary closing conditions.
COMMENT This is an interesting time for Ionics to make an acquisition of this magnitude, as the company is in the midst of a major restructuring programme intended to save US$15 million a year (FIA, October 2003). Ionics will have to work especially hard if it is to efficiently integrate Ecolochem at this time of upheaval. ■
LAROX BUYS OUTOKUMPU’S FILTER BUSINESS Larox Corp is set to double its sales having acquired the filter business of metals giant Outokumpu in a transaction valued at 31 million. The acquisition comprises the Outokumpu Technology GmbH pressure filter business in Germany, the vacuum belt filter business of Dutch Royal Pannevis BV and Outokumpu Mintec Oy vacuum filter business in Finland. Among the trademarks involved in the transaction are Pannevis, Hoesch and Ceramec. The net sales of the acquired business are put at around 40 million for 2003, while the operating profit before extraordinary items is forecast at about 2.8 million. 172 employees joined Larox as part of the takeover. Following the merger, Larox’s net sales are forecast to double from an estimated 50 million in 2003 to more than 100 million in 2004. Timo Vartiainen, Larox’s chairman, said: “The new products and services will clearly strengthen our market position in the metallurgical industry, in the filtration of concentration sands of the mining industry, and particularly in the chemical industry.” The transaction also contains a technological cooperation agreement between Larox and Outokumpu Technology. The agreement guarantees that
Outokumpu Technology will get the solid/liquid separation solution products and services it may need from Larox. In addition, it enables Larox to make use of the services of the Outokumpu Research Center in Pori, Finland. Vartiainen said the merger would enable cost savings of around 4 million to be realized from 2005 onwards via synergies in product development, marketing, production, sub-contracting and other purchasing-related savings. Larox will finance the purchase using a long-term bank loan and a loan granted by Outokumpu. The company is studying the possibility of arranging a share issue to strengthen its capital structure in spring 2004. Such a share issue would also aim to expand Larox’s ownership base to improve its liquidity and might also see it enter the main list of the Helsinki stock exchange.
SPX OFFERS £28.1 MILLION FOR MCLEOD RUSSEL SPX Corp has agreed the terms of a £28.1 million takeover bid for UK-based filtration group McLeod Russel Holdings plc. The takeover supports SPX’s strategy of expanding its filtration business into the industrial process and atmospheric air filtration markets. Continued on page 16
CONTENTS COMPANY PROFILE 5–6 COMPANY WATCH 7–9 DIARY 15 ECONOMIC REVIEW 14 IN BRIEF 11,12 MARKET PROSPECTS 2–4 NEW PRODUCT DEVELOPMENTS 11 NEWS 1,12,13,14,16 ORDERS 10 PEOPLE 11 STOCK WATCH 15 ISSN 1365-6937/04 © 2004 Elsevier Ltd. All rights reserved. This journal and the individual contributions contained in it are protected under copyright by Elsevier Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.