Growing Pressure nets vital target for £3.3m

PRESSURE Technologies yesterday sealed a £3.3m acquisition to continue its expansion into the oil and gas sector.

The Sheffield engineering group is buying the Hydratron group, which designs and makes high-pressure hydraulic pumps.

"It's got huge potential in its own right," said Pressure chief executive John Hayward. "Although they're in the oil and gas sector, it's right the way across oil and gas, and does not depend on a very narrow market.

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"I would hope that this business will double within the next three years."

Hydratron, based in Manchester, also has sites in the US and Australia. Founded in 1981, it had sales of 4m for the year to the end of April, and pre-tax profits of 0.3m.

Pressure paid an initial 2.5m cash on completion, to be followed by deferred payments of 400,000 to be paid in October 2011 and August 2012.

Hydratron had been primed for a sale by its managing director and major shareholder Philip Sanders, who is staying with the company until August 2012. He will manage the integration, plus lead expansion of the US business.

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It already had a succession plan in place, said Pressure, and "capable managers are in place at all levels in the business".

"Hydratron has been on our target list for a long time," said Mr Hayward. "It would have gone to somebody else if we were not prepared to pay the price.

"The business has good growth prospects and synergies with other parts of our group, as well as providing an anchor for other potential acquisitions serving the oil and gas sector and direct access to the US market."

Hydratron set up its US business in Houston, the heart of the US oil industry, in 2007. Its other products include gas boosters, power packs, hydraulic control panels and test rigs.

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Pressure said the Houston base will give another of its businesses, valve wear parts manufacturer Al-Met, better access to the US market.

Hydratron has 46 staff in the UK, plus five in the US. Its Australian business, employing two staff, will be closed at no cost to Pressure.

Mr Hayward said Pressure's biogas division, which makes purifying systems to "upgrade" methane gas for domestic use, will also benefit from the acquisition. "The fabrication skills that they have got in Manchester mean that we can use them to build our biogas division," he said.

Shares in the group yesterday remained flat at 201.5p, giving it a 23m market valuation.

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"Our vision remains to grow our market capitalisation," said Mr Hayward. "Our next big thing is to get to 50m market cap because it gets us onto the radar of a lot of people."

Pressure yesterday said its results for the year to the end of September will be in line with market expectations.

The group has been hampered by slower spending in the deepwater oil and gas markets following BP's Gulf of Mexico spill and the global downturn, and warned the order logjam must clear for it to meet future market expectations.

"Anticipated orders for deep water projects at the group's subsidiary, Chesterfield Special Cylinders (CSC), are still pending," said the company. Typically, CSC's deepwater products have lead times of up to six months.

Pressure said it will be better informed about its outlook in December, when it publishes annual results.