Acquisition of Vacuumschmelze Group from Siemens
Morgan Crucible Co PLC
1 November 1999
The Morgan Crucible Company plc
Acquisition of Vacuumschmelze Group
The Morgan Crucible Company plc has reached an agreement to acquire the
entire share capital of Vacuumschmelze GmbH and Vacuumschmelze Corp.
(collectively 'VAC') from Siemens AG for cash consideration totalling DM 347
million (£114 million) and the assumption of DM 33 million (£11 million) of
net debt. It is anticipated that, subject to any necessary regulatory
approvals, completion will take place on 15 December 1999, with an effective
date of 1 October 1999.
The acquisition of VAC is a major step in implementing Morgan's strategic
initiative to re-invest the proceeds from the sale of its MRO business into
high growth opportunities in its strong core business areas. It equips
Morgan with a unique capability to provide total solutions in the electric
motor markets.
VAC is a world leader in high performance magnetic systems, based on superior
metal alloy technology. It is focused on delivering total engineering
solutions for high growth global markets including transportation,
telecommunications and information appliances, security, and medical. Morgan
and VAC are both founded on application engineering and technical
differentiation, supported by superior materials technology and process
skills. VAC has a particularly strong research and development capability: a
high proportion of its sales is derived from new products, helping to deliver
double-digit annual growth in sales and profits in recent years.
Headquartered near Frankfurt, it has facilities in Continental Europe, North
America, and Asia.
VAC's audited accounts for the year to 30 September 1998 showed turnover of
DM 567 million (£186 million) and profit before tax of DM 42 million (£14
million). Net assets were DM 117 million (£38 million). The provisional
results for the year to 30 September 1999 show turnover of DM 518 million
(£170 million).
Despite some short term effects from the Asian situation experienced in 1999,
VAC continued its long term drive to improve competitiveness by installing an
automated Malaysian production facility, establishing a low cost Slovakian
assembly plant and investing in a large expansion programme at its capacity-
constrained Hanau material processing plant in Germany. While these costs
are likely to impact materially on the results for the year to 30 September
1999, the benefits from these actions will enable VAC to meet the increased
demand it is now experiencing for the year 2000. The acquisition is expected
to be earnings enhancing in its first year with Morgan.
In complementing Morgan's existing Carbon and Ceramics businesses, as well as
in new high growth markets, the acquisition of VAC brings considerable
benefits to Morgan:
* Today Morgan provides the commutation solution by which current is
transferred in brushed electrical motors. VAC's magnetic systems offer a
complementary 'non contact' solution for energy transfer in the high growth
market for brushless motors used in a wide range of applications from
electric shavers to locomotives.
* In telecommunications and information appliances, where miniaturisation and
low power consumption are key, VAC's superior proprietary manufacturing
processes provide the best performance to weight ratio in the world - a real
competitive advantage. Maintaining and increasing this advantage is a key
objective of VAC's research and development. VAC products also support the
high speed data transmission required by the rapidly growing demand for
interactive services.
* Other VAC applications include high temperature brazing alloys, extending
Morgan's existing range; magnetic couplings for seal-less pumps; and
superconductors for medical MRI scanners.
VAC's experienced management team will join Morgan, and will continue to be
led by its Co-Presidents Werner Harbauer and Klaus Meyer, who between them
have over 50 years of relevant experience. Its integration into Morgan's
Carbon Division will be led by Sonny Williams, President of Morgan's global
automotive and consumer products business. Sonny has extensive experience in
the magnetics industry and in managing global technology companies targeted
in the automotive, consumer and telecommunications markets.
Commenting on the acquisition, Ian Norris, Chief Executive of Morgan said:
'I am delighted to be able to announce the acquisition of VAC, and welcome
its highly skilled people into the Morgan group. Both in technology and
market it complements our existing global businesses. This excellent fit
provides a strong platform for Morgan to achieve significant organic growth
in the future, especially in the telecommunications and transportation
markets. The acquisition of VAC is a major step in the implementation of
Morgan's strategy for the new millennium.'
Enquiries:
Ian Norris, Chief Executive 01753 837000
Graham Swetman, Finance Director 01753 837000
Jon Coles, Brunswick 0171 404 5959
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