David Brown buys rival for 11m pounds

DAVID BROWN Group, the manufacturer of gears for tanks and trains, is buying the rival Hamworthy Hydraulics and Transmissions businesses for pounds 11.1m in a deal that should lead to considerable rationalisation and cost savings.

It is paying Powell Duffryn, the vendor, with the pounds 8.4m proceeds of a placing and one-for-twelve open offer and cash.

Christopher Brown, joint chief executive, said that he planned to close one of the six transmission factories owned by the two groups. He hopes to raise the Hamworthy businesses' ratio of pounds 45,000 sales per employee to nearer David Brown's ratio of pounds 50,000.

Mr Brown also considers the two businesses a good fit. Hamworthy's sales operations in Continental Europe are particularly attractive to him.

Hamworthy has been making steadily lower losses in recent years. In the year to 31 March 1991 it lost pounds 2.3m, in 1991/92 it lost pounds 1.74m and last year it lost pounds 110,000.

David Brown shares rose 22p to 223p yesterday.

BZW, the house stockbroker, has raised its pre-tax profit forecast from pounds 10.4m to pounds 10.6m this year, while earnings per share are unchanged at 13.1p. Next year the pre- tax profit forecast is up from pounds 12m to pounds 13.8m and earnings per share up from 15.1p to 16.3p.