Fenner buys Multiseal to strengthen position in Asian market

The group, based in Hessle near Hull, said it paid 14.425m Singapore dollars (£7.04m) in cash and shares for Singapore-based Multiseals.

Multiseals makes and distributes seals to the oil and gas industry in the Asia-Pacific region.

“This strategic acquisition will allow Fenner Advanced Sealing Technologies (Fast) to exploit the expanding Asian aftermarket for oil and gas products,” said the group.

“Multiseals will give Fast instant recognition in the region and a platform for growth. Overall this is a very exciting opportunity for Fenner and indeed for Multiseals.” On Wednesday Fenner revealed surging half-year sales and profits and said it planned more acquisitions, particularly in the aftermarket, where it offers follow-up services.

Fenner said the Asia-Pacific oil and gas market is estimated to be growing at 11 per cent annually, supporting the region’s booming energy demands. Buying Multiseals will allow customers to get custom-made products locally.

Fenner plans to share products, services and capabilities between Multiseals and its own operations. Multiseals’ product range will be expanded to include oil field seals supplied by Fenner’s Texas operation, CDI Seals. The two firms have previously partnered to provide bespoke products and designs for customers. They will also share custom moulding and machining capabilities.

Multiseals will also make Fenner’s new Tuff Breed range of expendable products for oil fields, which includes products designed for hydraulic fracturing and high-pressure pumping.

Multiseals was founded in 1987 and now supplies Asia, Europe, North America, China and Middle East with a range of more than 250,000 products.

Fenner will issue 480,387 shares to satisfy 3.6 million Singapore dollars (£1.8m) of the acquisition.

On Wednesday Fenner said underlying pre-tax profits lifted 93 per cent to £31.4m in the six months to the end of February. Sales surged 35 per cent to £332.5m.

Shares in the group yesterday lifted 20.1p to 387.8p, a 5.5 per cent gain, after upgrades by stockbrokers.

Panmure raised its target price for the stock to 415p from 380p on stronger revenue growth assumptions. “Following the interim results we raise estimates by five per cent, nine per cent and nine per cent for 2011, 2012 and 2013 respectively,” said the broker in a note.

“These increases are driven by more upbeat revenue assumptions (including raw material pass-on effects) as margins remain broadly the same and as financial charges, tax rate and net debt forecasts are edged up.”