North East manufacturer Tekmar has grown its business after buying a rival underwater protection company for £6.5m.
Tekmar, which makes protection systems for underwater cables, has signed a deal to acquire Pipeshield from its founder Steven Howlett.
Pipeshield’s head office is located in Lowestoft but the company has manufacturing bases in Teesside, Aberdeen, Peterhead, Singapore, Indonesia, Cape Town and Abu Dhabi. It specialises in making concrete mattresses that protect pipelines and power cables.
Tekmar floated on the stock exchange last year and set aside £10m of the £61.8m it raised to expand the business and acquire more firms.
The deal will see Tekmar pay a total of £6.5m for Pipeshield, with £3m paid up front along with £750,000 worth of shares in Tekmar. Deferred payments of £1.5m and £1.25m will be paid on April 9 2020 and October 9 2020 respectively.
James Ritchie, chief executive officer of Tekmar, said: “Pipeshield is a perfect fit for Tekmar. Its products are complementary, allowing us to upsell and expand our offering to clients, realising our group vision.
“The business has many similarities with Tekmar from both end customers to markets but also most importantly it fits culturally. The business focuses on technology, as its key differentiator, and Pipeshield has outstanding credentials, which demonstrate its commitment to safety, quality and, above all, its people; these are key values which we embrace across all group companies.
“I am truly excited by the prospect of adding the Pipeshield offering to Tekmar’s portfolio and I welcome Steve and his team to the family.”
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Pipeshield currently employs 25 full time members of staff as well as around 15 contractors who support the manufacturing process. Although the company has manufacturing operations around the world, the bulk of its production activity takes place in Blyth, Northumberland.
Pipeshield brought in £6.6m in turnover and £800,000 of profit before tax for the 2018 financial year. This was up from £3.4m turnover and £100,000 profit in 2017. It is estimated that the firm’s 2019 results will be slightly ahead of last years figures.
Following the completion of the deal Pipeshield’s founder, Steven Howlett, will remain as its managing director.
Mr Howlett said: “Tekmar and Pipeshield have many similarities. We are industry-leading technology providers within subsea protection and share a similar history and culture. I am keen to see the business progress and believe that being part of Tekmar will accelerate the achievement of our long-held growth aspirations.
“I want to thank the Pipeshield team for all its hard work, getting us to this point, and highlight, to my staff and customers, that this change in ownership will only increase the opportunities for the business and our passion for delivering outstanding technical solutions. Other than that, it’s very much business as usual.”