Investment experts say aerospace firm Umeco achieved a “disappointing” price for its supply chain business – but believe the firm is more streamlined for future profits.
The Leamington firm sold Pattonair to Exponent Private Equity for £145.8 million as part of a raft of changes, with cash proceeds of £102 million.
It also revealed its chief executive and finance director had resigned as part of a shake-up following the sale to private equity firm.
The company said Clive Snowdon and finance director Douglas Robertson stepped down after their involvement in a proposed management buyout of Pattonair.
The company said the disposal would allow it to focus on its composites business, which has higher margins and a broader customer base. But analysts at UBS said the result was disappointing.
“The disposal of the Supply Chain business is in some way disappointing – the cash proceeds of £102 million from the sale are lower than we expected despite a decent headline EV of £146 million,” UBS said in a brokers note.
“In our view, the gap of £46 million is a loss to our estimated fair value for Umeco.”
Umeco, which also makes composite materials for Formula One racing cars, named chief operating officer Andrew Moss as its new chief executive and financial controller Steven Bowers as its finance chief.
The group said the sale will generate net proceeds of about £109.3 million, before transaction costs, for Umeco, which said it would use the funds to pay down debt.
Mr Moss, who was formerly chief operating officer at Umeco, said: “The proceeds from the disposal will be used to strengthen our balance sheet which will enable us to build further scale, both organically and through potential acquisition. We relish the opportunity to bring additional focus and resources to bear to enhance what we believe are attractive market positions in advanced composites with a view to generating additional shareholder value over time.”
In February, Umeco said it was in discussions to sell Pattonair, which counts Rolls-Royce , BAE Systems and the US Department of Defense among its customers.
The operation brought in £235 million worth of revenue in the 2010 financial year – representing far more than half of Umeco’s £409 million annual sales.
Mr Bowers was formerly group financial controller at the firm. His and Mr Moss’s appointments begin with immediate effect.
Stephen Jones, head of the Birmingham office of investment firm Brewin Dolphin, said the sale left Umeco able to focus on the more profitable side of its business.
He also tipped the firm to go on the acquisition trail.
Mr Jones said: “It is in the fastest-growing space in the aerospace sector now and that has to be good news.
“Composite technologies are the way forward for the aerospace sector so one would think the business is better-positioned to take advantage, with perhaps some corporate activity.”
David Beech, partner within the corporate team at Irwin Mitchell Solicitors advised management on the deal.