Powell Industries buys Switchgear & Instrumentation for $18.4 million

Houston, TX—Powell Industries Inc. reports that it has completed its acquisition of U.K.-based Switchgear & Instrumentation (S&I) Ltd., a division of NG Bailey Organisation (NGBO) Ltd. for $18.4 million in cash.


Houston, TX— Powell Industries Inc. reports that it has completed its acquisition of U.K.-based Switchgear & Instrumentation (S&I) Ltd., a division of NG Bailey Organisation (NGBO) Ltd. for $18.4 million in cash. The purchase includes S&I’s fixed assets and select working capital. The transaction is being financed with a portion of Powell's existing cash and bank debt.

The decision to sell S&I after over 40 years of ownership reportedly was triggered after NGBO recently refined its future direction, strategy, and priorities.

Powell expects minimal impact from the acquisition in the current fiscal year ending Oct. 31, 2005. However, the acquisition is expected to be accretive in the first full year of ownership. The incremental impact of the acquisition in the first 12 months is expected to result in revenues of $45 to 50 million and earnings of $0.14 to 0.19 per diluted share.

'We’re extremely pleased that we are able to make this acquisition. Based on the markets that S&I serves and the technologies deployed, we believe it is an excellent fit,' says Thomas Powell, Powell’s chairman and CEO. 'This acquisition is a part of our overall strategy to position Powell as the leader in meeting the highly customized needs of clients wherever they are located, and to move with our customers in an increasingly global economy. S&I is a dominant supplier to the international oil, gas, and petrochemical sectors and to U.K.-based engineering procurement and contracting (EPC) firms, in which brand recognition and product knowledge are critical. S&I has a proven capability to supply fully integrated systems solutions and project management to customers with highly complex and specific requirements in all operating environments.

'Powell's focus is on customers with large, complex, customized projects, and when it comes to managing their electrical equipment needs, we deal with the requirements of these major multinational companies under American National Standards Institute (ANSI) electrical specifications. S&I's emphasis is on these same customers, and on their International Electrotechnical Commission (IEC) specification needs. In fact, a major customer in S&I's cur-rent backlog is also one of our largest clients. This acquisition will allow us to support major multinational firms that have complex projects around the world, and over time develop much broader relationships with them.'

S&I reportedly is the U.K.'s leading supplier of medium- and low-voltage switchgear, intelligent motor control systems, and power distribution solutions to many process industries, including oil, gas, petrochemical, power generation and distribution, heavy industry, pharmaceuticals and water and wastewater treatment. Driven by the highly complex requirements of its target markets, in particular the oil, gas and petrochemical sectors, S&I's intelligent solutions reportedly offer the most flexible and technically advanced production, control and monitoring functions available.

Similar to Powell, S&I reportedly is committed to research and development, and has grown by focusing on R&D and expanding its products and solutions. Also, as Powell has with its power control rooms, S&I has modular-design expertise, and offers modular solutions for large, complex projects in the switchgear market.

S&I has a 12,000-square-meter manufacturing facility in Bradford, U.K.; a dedicated sales presence in the U.K., and approximately 300 employees. It has operated as a stand-alone business within NGBO, and despite ongoing investment in S&I in terms of management, research and development and operational infrastructure, the business has remained non-core to the parent company for a number of years. Over 90% of the parent company's revenues relate to the provision of mechanical and electrical contracting and maintenance services to the U.K. construction industry.

Powell designs, manufactures and services equipment and systems for the management and control of electrical energy and other critical processes. Powell provides products and services to the transportation, environmental, industrial and utility industries.

Control Engineering Daily News Desk
Jim Montague, news editor

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