TI seals polymer expansion with pounds 189m cash offer for Forsheda

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The Independent Online
TI doubled the size of its polymer engineering business yesterday with a pounds 189m recommended cash offer for Forsheda, a Swedish sealing systems business. The deal is the latest in a series of "bolt-on" acquisitions the diversified engineering group has used to expand its three core businesses of fluid carrying, engineering seals and aircraft landing gear.

Sir Christopher Lewinton, chairman, said: "Bringing together Forsheda, a major bolt-on, and our current polymer business will create a pounds 300m turnover operation with world leadership potential. Forsheda's product ranges are entirely complementary to our own and TI's international strengths will enable their rapid globalisation."

The acquisition of Forsheda marks a continuation of the transformation of TI over the past 10 years from a loose consumer-based business to one of Britain's few globally competitive engineering businesses. The shares, which have risen from a low of 333p at the beginning of last year, added 2p to 572p yesterday.

Forsheda, which employs 1,250 at 18 locations in 13 countries, is recognised as a leading maker of high technology polymer sealing products for a range of industrial applications in the motor and defence industries. More than 80 per cent of its sales are in Europe and it has a growing North American business.

Sir Christopher added: "So far this year we have invested some pounds 240m in bolt-on acquisitions. All of these are in line with our declared strategy and will accelerate organic growth in key business areas and enhance earnings in 1997."

TI secured agreement to accept the offer from Forsheda's controlling shareholder, Agora Group, by pitching a higher offer at Agora's higher voting 'A' shares, which give it 21 per cent of the equity but 64 per cent of the company's votes. In return for a 10 per cent premium for its shares, Agora agreed not to compete with TI for two years.

In the year to December 1995, Forsheda had turnover of pounds 134.6m from which it made pre-tax profits of pounds 21.6m. At the year-end it had net assets of pounds 51.9m. TI said yesterday it planned to accelerate Forsheda's growth, developing its world leadership in concrete pipe seals for the construction industry, its plastic pipe seals business and its Rotary seals and "O" rings which complement TI operations. TI's Polymer Engineering business operates in seven countries. It had sales in 1995 of pounds 140m.