Dyson sells parts firm Saffil to Unifrax

The Sheffield-based company declined to say how much American industrial group Unifrax paid for the Saffil fibres business, but the deal frees Dyson of unsecured bank debt last valued at £35m.

About 300 staff across the UK, South Africa, the US, Japan, China and Brazil will transfer to Unifrax, a global supplier of insulation products.

The Saffil business forms the rump of the remaining Dyson business, which has been broken up in recent years after a heavy debt burden nearly forced it into administration.

Widnes-based Saffil makes and sells high-temperature polycrystalline wool for use in vehicles’ catalytic convertors and industrial insulation. It has grown over the past two years as automotive markets recover.

Dyson chairman Julian Cooper said: “Unifrax will be a great parent for the Saffil business. The markets served by Saffil are strategically important to Unifrax and Saffil’s product family nicely complements the current Unifrax offering.

“Unifrax is prepared to make the investments necessary to secure the long-term future of the business. These would have been difficult for Dyson to make. We are confident the sale of the business to Unifrax provides Dyson shareholders fair value while securing a bright future for Saffil employees.”

None of the Saffil staff are in Yorkshire. Dyson will have 37 staff left in the region after the deal. The former stock market-listed company’s remaining trading businesses will be The Builders Centre (Sheffield) Ltd and its County Durham-based zirconia nozzles and tin oxide business. It also has a sizeable property portfolio.

Dyson, which started life in 1810 with a ceramics factory, last year refinanced with its banks Lloyds TSB and Svenska Handelsbanken after slumping profitability meant it could not fund its pension scheme or meet covenants. That followed the suspension of its shares and the closure and sale of some businesses.

Last year’s debt-for-equity swap left shareholders with 12 per cent of the company’s equity, with its banks taking a 51 per cent stake.

The banks also refinanced £35m of their debt in return for security over the group’s assets, and lent Dyson another £4.5m of working capital.

Dyson said once it is complete, the deal will clear its outstanding secured debt and lift the security the banks held over its assets.

“The board will consider how best to deploy the residual proceeds, including giving consideration urgently to the possibility of returning capital to its shareholders,” said Dyson yesterday.

New York-based Unifrax has 17 manufacturing sites across the globe, employs about 1,300 staff, and is a leading supplier of insulation to industrial, automotive and fire protection markets.

It plans to combine Saffil with its manufacturing and conversion technologies to create a “global force in the automotive catalytic converter mat market”.

The company added it will give Saffil access to funds to grow.

Mark Briscoe, chief executive of Saffil, said: “Saffil is entering an incredibly exciting new era. Over the past two years Saffil has continued its very rapid growth and gained market share, particularly in the European heavy truck market and the fast growing developing economies of Asia and South America.

“By combining with Unifrax, we are creating a major new global force in the catalytic converter mat market that will deliver innovative best-in-class products for our customers.

“Together with Unifrax we will continue to invest in capacity expansion so as to support our future growth.”

Dyson was advised by law firm DLA Piper, accountants Ernst & Young and M&A specialist Lincoln International. Other advisers included Walker Morris, Irwin Mitchell and Mercer.

Catherine Simister, lead advisory partner at DLA Piper in Yorkshire, said: “We are very pleased that we have been able to work with Dyson, a long-standing client of the Sheffield and Leeds offices, to achieve the sale of Saffil.

“Made possible as a result of the high-profile restructuring of Dyson in 2010, this complex international transaction demonstrates the depth and quality of expertise available in Yorkshire and across our global network, drawing on the skills of our colleagues from offices in the UK, US, South Africa, Japan and Europe.”

Roots lie in industrial heritage

Dyson Group has its roots in Sheffield’s industrial heritage.

Its origins date from the early 19th century, when a ceramics factory opened in Sheffield in 1810. It floated on the London Stock Exchange in 1958.

After predominantly supplying the steel industry, the group diversified in the 1970s into the general ceramics industry. In 1999 it bought Saffil, a pioneer in heat-resistant fibres.

When the recession hit the debt-heavy business was forced to cut costs and sell off businesses. Its shares were suspended in July 2009 and it de-listed in April 2010.

Its shareholders agreed a debt-for-equity restructure in late 2010 to hand banks the majority of its equity.