Acquisition

RNS Number : 5064M

Spirax-Sarco Engineering PLC

25 May 2010

 



Spirax-Sarco Engineering plc	Charlton House Cheltenham Glos. GL53 8ER
News Release	Telephone:  [phone] Fax:  [phone] www.SpiraxSarcoEngineering.com

25^th May 2010

Spirax Sarco acquires remaining 51% equity in Mexican Associate Company for £10.7 million 

Spirax-Sarco Engineering plc announces that it has acquired from its local partners the remaining 51% voting equity in its Mexican operating company, Spirax-Sarco Mexicana S.A. ("Spirax Mexico"), which was previously 49% owned by the Group and accounted as an Associate. 

Spirax Mexico has been Spirax Sarco's exclusive licensee and distributor for Mexico since 1980, successfully growing the business and establishing Spirax Sarco as the market leader.  We are pleased to gain full control in this strategically important market that has the 13^th largest economy in the world and the 11^th largest population.  The Mexican industrial steam‑using base, that is Spirax Mexico's target market, is expected to provide good future growth prospects as we invest and increase focus in this developing market.

The purchase consideration for the 51% of Spirax Mexico not previously controlled by the Group is MX$201.9 million (£10.7 million), which will be settled in instalments over an expected five year period from existing Group resources.  It is anticipated that the business will have net cash balances in excess of £1m at Closing.  Trading has started well in 2010 and we expect the transaction to make a small positive contribution to Group earnings in the second half of 2010.

Accounting changes

Under the provisions of amended IFRS3, which will apply to the Group for 2010, the results of Spirax Mexico will, with effect from 25^th May 2010 onwards, be fully consolidated with sales and operating profit included in the Americas segment in the Group results.  Up to this date, Spirax Mexico will continue to be accounted for as an Associate with 49% of the after-tax profit for this period included within Associates in the Group Income Statement.  In addition, as required by IFRS3, the 2010 Group accounts will reflect the uplift in the current book value of the Group's existing 49% investment, which will be shown as an exceptional profit of approximately £8 million in the Group Income Statement.

About Spirax Sarco

Spirax-Sarco Engineering plc provides a broad range of fluid control products, engineered packages, site services and systems expertise for its diverse range of over 100,000 industrial and institutional customers.  The Company helps its customers to optimise production capacity, reduce energy costs and emissions, improve product quality and enhance the safety of their operations.  Spirax Sarco is headquartered in Cheltenham, England, has strategically located manufacturing plants around the world and employs approximately 4,200 people, of whom 1,200 are direct sales and service engineers.  Its shares have been listed on the London Stock Exchange since 1959 (symbol: SPX).  Further information can be found at www.spiraxsarcoengineering.com.

Contact details:

Mark Vernon                -        Chief Executive

David Meredith            -        Director Finance

Spirax-Sarco Engineering plc

Charlton House

Cheltenham

Gloucestershire

GL53 8ER

Tel:  [phone]

Fax:  [phone]

www.SpiraxSarcoEngineering.com

 

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