SubscribeContinuing its successful strategy of acquiring and developing technically sophisticated businesses in growing infrastructure and asset management markets, Babcock International Group PLC (“Babcock”) today announces the acquisition on a debt free basis of Alstec Group Limited (“Alstec”) for a net cash consideration of £44.9 million, funded from existing banking facilities.
Alstec reported turnover of £82.6 million in the year ended 31 March 2006 and profit before interest and tax was £3.7 million after charging £1 million in respect of legacy claims not transferring to Babcock. The business has a total order book of in excess of £67 million and gross assets of £21.5 million. The recent award of additional contracts in nuclear and an extension of operations in the airports business together with a reduced level of ongoing costs offer excellent prospects for growth in Alstec's profits in the current year.
Alstec operates in three distinct support services markets that are very familiar to Babcock; nuclear, airports and defence systems. Within each of these markets Alstec provides a range of services and engineered solutions for its customers' operationally complex and critical activities. Babcock provides high value, technically based services to large public sector and blue chip customers operating in complex environments. Alstec's operations are entirely consistent with this model.
In nuclear, with turnover of £40 million in the year to 31 March 2006, Alstec provides technical expertise associated with the reactor island at many UK nuclear power stations including nuclear fuel handling equipment, remote inspection, instrumentation and safety systems. Alstec provides decommissioning and waste management services at the Atomic Weapons Establishment, Aldermaston and for the UKAEA and reactor outage support for British Energy with which Alstec holds 'critical supplier' status. Alstec supplies design, installation and commissioning services for reactor protection systems to British Energy and British Nuclear Group and is also involved in a number of long-term alliance contracts with other key suppliers to the nuclear industry. This business will provide a natural extension to Babcock's existing nuclear clean up and facilities management contracts at Rosyth and HM Naval Base, Clyde.
Alstec's airports services business, with turnover of £34 million in the year to 31 March 2006, provides operations and maintenance services for BAA PLC's automated baggage sortation system at Heathrow airport. The business also operates and maintains the inter-terminal transfer facilities between all terminals. Opportunities to expand the provision of these services at Heathrow into the proposed central terminal area redevelopment and the new T5 facilities together with the possibility of similar service provision at other airports offer excellent growth prospects.
Alstec also operates a small defence business (turnover in the year to 31 March 2006 of £9 million) for the design, supply, maintenance and upgrade of equipment for the Ministry of Defence and its equipment suppliers for submarines, surface ships and aircraft. In particular it designs, supplies and maintains key reactor components for the Vanguard and Astute class submarines and is the design authority for the hydroplane and rudder actuators for Astute. Alstec's defence business has also been selected as supplier and systems integrator for the award winning weapons handling system for the future aircraft carriers and has been working in partnership with Babcock at Rosyth on a number of other aircraft carrier opportunities over the past twelve months.
The combination of Alstec's skills and track record with those of Babcock creates exciting new opportunities in two major growth markets: nuclear decommissioning and airport management as well as augmenting Babcock's existing strong position in the maintenance of submarines, surface ships and on the new carrier programme.
Peter Rogers, Chief Executive of Babcock, commented:
"Alstec is an excellent strategic fit with Babcock's existing support services activities and brings to us an important set of new customers. We are now well placed to bid for a range of opportunities in the expanding market for nuclear utility support services and decommissioning. Alstec's position in the airport services market is well established, and provides Babcock with a number of additional opportunities in a growing market.
Having recently secured some significant new contracts, Alstec offers excellent growth prospects and we expect the acquisition of the business to be earnings enhancing for Babcock in its first year of
ownership."
Martin Melling, Alstec's Chairman and Chief Executive, commented:
"We are delighted to be joining Babcock. Alstec has an exceptional pedigree dating back to its GEC heritage, and there are significant opportunities to grow in each of our core markets. We believe that, with Babcock's resources, relationships and complementary skills, we are exceptionally well-placed to grow our business, which will provide increasing opportunities for the Alstec workforce."
09 May 2006
