Pressure Technologies in £3.3m Hydratron deal

Engineer Pressure Technologies has bought a Lancashire air pressure firm for £3.3m.

The Sheffield-based firm said it acquired the Hydratron group of companies, based in Altrincham, the US and Australia. It also said its own annual performance was should be in line with expectatons.

Hydratron designs, manufactures and sells air operated high pressure hydraulic pumps, gas boosters, power packs, hydraulic control panels and test rigs.

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Pressure Technologies (PT), which makes high-pressure cylinders used in defence, shipping, aviation and deep-sea oil and gas, said it paid an initial 2.5m to be followed by two deferred payments of 400,000 to be paid in October next year and August 2012.

The sum is seven times larger than Hydratron's UK operating earnings before interest, taxes, depreciation, and amortisation. Hydratron had sales of 4m in the UK in the year ended 30 April and PT described the foreign operations as "essentially start-up businesses".

The net assets of Hydratron, after elimination of investment in subsidiaries, were about 1.1m, based on unaudited management accounts. Pre-tax profit attributable to the net assets 300,000.

John Hayward, chief executive of PT, said: "Hydratron has been on our target list for a long time, as it shares Pressure Technologies' passion for innovative design, high quality and solid engineering skills.

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"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. It is a valuable addition to our portfolio of companies."

Hydratron was set up in 1981 and supplies high pressure equipment to the oil and gas industries.

It has sales and manufacturing companies in Altrincham and Houston, US. It also has a small stockist and distribution company in Brisbane, Australia, and a spread of third party distributors around the world.

The firm has 46 staff in the UK, five in the US and two in Australia. The Australian subsidiary will be closed but a full-time sales presence will be maintained in the region to service Australia and the Pacific Rim countries with products supplied from the UK.

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PT said full provision for the closure was made before completion of the deal and there will be no costs to the group, resulting from the closure.

The US arm of Hydratron was set up three years ago and is expected to be a key contributor to growth. Its people and facilities will be utilised by Al-Met, Pressure Technologies' UK based wear parts subsidiary, to service the US market.

Hydratron's fabrication facilities in the UK will also be used by PT to manufacture biogas upgraders for the Chesterfield BioGas division.

Philip Sanders, managing director and principal shareholder of Hydratron, has agreed to stay with the company until August 2012. He will manage the integration process, as well as lead the expansion of the US business. A succession plan had already been implemented at Hydratron, in anticipation of the company's sale, and PT said capable managers are in place at all levels in the business.

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PT also said its performance for the year ended 30 September is anticipated to be in line with market expectations but warned the deep water oil and gas market remained depressed because of the economic cycle and the effect of the Gulf of Mexico oil spill.

Anticipated orders for deep water projects at subsidiary Chesterfield Special Cylinders are still pending.

PT said winning firm orders by December will be key to meeting current market expectations for the year ending 30 September 2011, which exclude the impact of the Hydratron deal. The board will update the market on its outlook when it gives its year-end results, expected to be announced early in December.