McGowan back on track as he snaps up Formula 1 supplier

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The Independent Online

Brian McGowan, the City wheeler-dealer who helped build Williams Holdings into one of Britain's biggest conglomerates during the 1980s with a series of daring corporate raids, is back on the takeover trail.

Brian McGowan, the City wheeler-dealer who helped build Williams Holdings into one of Britain's biggest conglomerates during the 1980s with a series of daring corporate raids, is back on the takeover trail.

A small aerospace and defence supplier chaired by Mr McGowan announced the purchase yesterday of a company which provides specialised composite materials to the world's Formula 1 motor racing teams.

Umeco, which Mr McGowan has chaired since 1997, is paying £44.25m for the Derbyshire-based Advanced Composites Group (ACG). Apart from Formula 1, the privately owned company also supplies Porsche, Ferrari and Mercedes and a string of big defence contractors including BAE Systems, Boeing, Lockheed Martin, Northrop Grumman and Thales.

The takeover is being part-funded by a £21m rights issue, with the rest of the money coming from bank borrowings. The deal will add a third leg to Umeco, reducing its reliance on the depressed civil aerospace markets, and will help increase its sales from about £180m in the year just ending to £300m by 2006.

Clive Snowden, the chief executive of Umeco, stressed, however, that this was not the start of another Williams-style story of growth through acquisition. "We are very focused and we intend to remain so," he said.

Umeco first held talks with ACG two and a half years ago, two days after the September 11 terror attacks in New York, but could not agree financial terms with the company's private equity backers, MTI and Foresight Technology. The price finally paid represents 12 times ACG's operating profits last year of £3.8m. Umeco said it expected the takeover to increase its earnings per share in the first year of ownership. Umeco has two main divisions - one organising just-in-time supply of components to aerospace and defence companies and the other which specialises in the curing of composite materials.

The ACG deal will take it deeper into the advanced composites market and the motorsport industry. ACG has exclusive supply contracts with four of the 10 Formula 1 teams, providing the high-strength and durable materials used to manufacture most of a racing car's structure and bodywork. It also supplies the medical, wind energy and marine industries, including providing materials for America's Cup yachts.

Since 1997, when Mr McGowan and Mr Snowden came on board, Umeco has pulled off two other small takeovers of composites companies - Aerovac and Richmond.

The rights issue involves the issue of one Umeco share for every three held at a price of 270p - a discount of 24 per cent to yesterday's opening price of 355p - and has been fully underwritten by Arbuthnot. Umeco shares were 11.5p lower at 343.5p - well above the theoretical ex-rights price of 330p.

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