Another rocky year but the market continues to mature...
MANUFACTURING DEALS REVIEW 2019
A REVIEW OF THE PERFORMANCE OF AIM LISTED MINING COMPANIES FOR THE YEAR TO JUNE 2019
800
600
400
200
0
2. FURTHER ISSUE PROCEEDS
...by contrast, secondary fundraising fell to the lowest level since our survey began.
2014/15
2015/16
2016/17
2017/18
2018/19
342
382
£m
795
498
153
Yellow Cake is not an
exploration or production
company but offers investors direct exposure to the uranium spot price. It will be interesting to see if an investment play such as this becomes a popular way to invest in commodities.
1. NEW ISSUE PROCEEDS
New issue proceeds were the highest since our survey began in 2010/11. However, there were only two IPOs, with Yellow Cake raising £151m…
0
£m
180
135
90
45
2018/19
2015/16
2016/17
2017/18
1
8.35
26.9
27.5
151.1
3. MARKET CAPITALISATION
AIM mining market caps are at the same level as five years ago despite there being 53 fewer companies.
And as a
result...
2013/14
No. of AIM mining companies: 157
Aggregate market caps: £4,398m
2018/19
No. of AIM mining
companies: 104
Aggregate market caps: £4,394m
Average
£28m
Average
£42m
4. MOVEMENT IN MARKET CAPS
5. MINING SECTOR PERFORMANCE
5%
-5%
-15%
-25%
Other mining companies
Top 10
Mining companies
All AIM companies
0.9%
-22.1%
-9.2%
-9.5%
Investors' current preference for larger mining companies with proven resources is reflected in the fact that the top 10 held their mining caps whereas all others fell.
The performance of the mining sector was in line with the wider AIM market
6. COMMODITY PRICES AND AIM BASIC RESOURCES INDEX
03.05
03.04
03.03
03.02
03.01
03.12
03.11
03.10
03.09
03.07
03.06
03.07
60
80
100
120
03.08
2017
2018
Since June, gold prices have increased by c9% whereas sector market caps have increased by c4% so AIM gold mining companies may be undervalued
Copper
Nickel
Gold
AIM Basic resources
Nearly 700 deals completed in 2019 involving a UK manufacturer, with 30% of these representing cross-border transactions. 133 UK businesses were acquired by international groups, with the US continuing to dominate, targeting the UK as its natural home from home. Meanwhile, UK investors acquired 120 targets abroad, shoring up interests in Europe and US markets.
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Copyright © MAY 2020 BDO LLP. All rights reserved. Published in the UK.
www.bdo.co.uk
FOR MORE INFORMATION:
BDO Global
Mining Group
BDO LLP Mining Sector
...average market cap has increased by 50% reflecting
the perceived size and quality of the remaining
population
MATT CRANE
+44(0)207 893 2958
matt.crane@bdo.co.uk
JEFF HARRIS
+44(0)129 384 8994
jeff.harris@bdo.co.uk
Manufacturing: a vibrant sector for M&A deals
FURTHER INFORMATION
Download a printable version
and visit the extracting Insights archive
Download a printable version
and visit the Extracting Insights archive
Manufacturing remains a critical sector in both advanced and developing countries, and at BDO we are proud to work with so many exciting industrial businesses across the globe.
Internal and external forces are pushing innovation across the sector as businesses grapple with the opportunities and challenges of Industry 4.0, digitisation and connectivity, the fast-developing green agenda, the growing role of developing economies, and an ever-shifting geo-political landscape. As the fifth largest economy in the world, the UK is home to many innovative businesses which are leading the charge on key issues, and frequently turning to M&A as a core means of achieving competitive advantage.
Our review of M&A activity involving UK manufacturing businesses in 2019 reveals a country that is very much open for business:
Engineering represents largest share of deals
Engineering represents largest share of deals
CARVE-OUTS
Manufacturing: a vibrant sector in 2019 becomes a sector of resilience in 2020
A REVIEW OF THE PERFORMANCE OF AIM LISTED MINING COMPANIES FOR THE YEAR TO JUNE 2019
MANUFACTURING DEALS REVIEW
Carve-outs were a key theme in 2019, representing 12 out of the top 20 M&A transactions in 2019.
Management teams in the manufacturing sector are under pressure to review and realign portfolios, and refocus on core activities, particularly where there are no or few synergies between businesses.
We expect carve-outs to remain a key theme due to the pressure inflicted on corporates by COVID-19.
Nearly 700 deals completed in 2019 involving a UK manufacturer, with 30% of these representing cross-border transactions. 133 UK businesses were acquired by international groups, with the US continuing to dominate, targeting the UK as its natural home from home. Meanwhile, UK investors acquired 120 targets abroad, shoring up interests in Europe and US markets.
Buy-outs represented 1 in 5 UK manufacturing deals, many backed by private equity, which has record levels of dry powder to deploy.
BUY-outs
2019
Chemicals
6%
Electric &
Electronic Hardware
7%
Life Sciences
6%
Industrial Automation
10%
Manufactured Materials
Test & Measurement
5%
Other
3%
Engineering Services
27%
Building Products
14%
Food & Drink
12%
Industrials businesses outperformed the FTSE 100 between 2009 and 2020, with market capitalisation and valuations seeing impressive growth during that period.
This continues to be the case, with the average EV/EBITDA multiple for UK industrials groups at 12.9x in April 2020, compared to 10.4x for businesses in the FTSE 100.
Listed Industrials businesses
Engineering services has been the most active sector, followed by Building Products and Food & Drink.
Most active sector
With a number of acquirers and business owners waiting to see how events unfold, the impact of COVID-19 is likely to mean reduced deal volumes for 2020.
UNCERTAIN DEAL VOLUMES IN 2020
Click for chart:
Engineering represents largest share of deals
Engineering represents largest share of deals 2019 UK deals by sub-sector
Chemicals
6%
Electric &
electronic
hardware
7%
Life sciences
6%
Industrial automation
10%
Manufacturing materials
10%
Food & drink
12%
Building products
14%
Australia
27%
US continues to dominate as acquirer Geographies making inward investment to UK
40
30
20
10
0
Number of deals
50
US & Canada
Germany
France
Ireland
Other Europe
Other
Asia
Click for chart:
UK prioritises Europe and US for investment
2019 deals
+44(0) 7966 373914
roger.buckley@bdo.co.uk
ROGER BUCKLEY
UK Industrials,
M&A Partner
10%
Click for chart:
BDO Market Cap index
Click for chart:
Buy-outs account for 1 in 5 deals
Other
Asia
Other Europe
Sweden
Germany
US & Canada
50
40
30
20
10
0
Number of deals
UK prioritises Europe and US for investment Target destinations of UK corporates buying abroad
France
Q2 19
250
200
150
100
50
0
Number of deals
Buy-outs account for 1 in 5 deals
UK manufacturing deal volume by type
Trade deals
Q1 19
Q4 19
Q3 19
Buy-outs
Secondary buy-out of ELE Advanced Technologies by LDC
Sale of Vossloh Locomotives
to CRRC
Sale of BOB-CAT Mowers and Steiner & Ryan brands from Schiller Grounds Care to Doosan Bobcat
MML backed buy-out of Eastland Engineering Supply
Sale of Ideenion Automobil to WE Solutions
Sale of Mavilor Motors to Guangzhou Haozhi Industrial
Engineering services
Click underlined text to link to further details
Sale of BKL to VADO (Anvil Industries)
Acquisition of OpTek Systems by Safety Technology
Sale of Schokinag to Guan Chong
Sale of Jack Doggies to OK Nutripet
Sale of Wild Rose Brewery to Sleeman Breweries
Sale of BM Food to Credo Partners-backed Geia Food
Refinancing of It’s All Good
Sale of Func Food Group to Celsius
Food & Drink
Click underlined text to link to further details
Sale of Aarts Plastics to Berk Partners
Sale of M’Plast to Charter Oak Equity-backed Licaplast
Sale of CEC Packaging to Covepa Michels Packaging
Sale of Premier Vanguard to EVO Group
Sale of Heidtman Steel Products to Worthington Industries
Sale of ALVARIS Profil Systems to INVEST AG
Click underlined text to link to further details
MANUFACTURED MATERIALS
Sale of Thurne Teknik to Addtech
Sale of Lambert Automation to Mpac
Acquisition of Peak 42 by Edwin James
Sale of Robert Seuffer to Blantyre Capital
Acquisition of Terra Nova Technologies by Cementation USA
Sale of majority stake in Bavak to OxGreenfield
Click underlined text to link to further details
INDUSTRIAL AUTOMATION
Sale of stake in Bermad to Tama Group
Acquisition of Multi-Tech Industries by Argonaut Private Equity
Sale of Yuyao Actuator Electric Motor to General Transmissions
CBPEs minority investment in ETL Systems
Sale of Satema to United Power
Acquisition of Reflect Photonics by Smiths Group
Acquisition of El Kraft Teknik & Konsult I Sala by Instalco
Click underlined text to link to further details
ELECTRIC & ELECTRONIC HARDWARE
Sale of Delamin Nitriding Salts to Parker Trutec
Sale of Avista Technologies to Kurita Water Industries
Acquisition of Texsus by Shalag Industries
Acquisition of MK Ingredients & Specialities by Azelis
Acquisition of Farber & Schmid by Indutrade
Click underlined text to link to further details
CHEMICALS
IPO of Plasticos Compuestos
Sale of Adam Equipment to Indutrade
Acquisition of MESSRING by DMB Dr. Dieter Murmann
Sale of Fozmula to Rochester Gauges
Acquisition of Atlas Technical Consultants by Insight Equity Management Company
Acquisition of Green Agrevolution and Intello Labs by Omnivore
Acquisition of Cawood Scientific by Meritas Group
Sale of Richbloom to Rotronic
MBO of Lucion Services backed by Palatine Private Equity
Click underlined text to link to further details
TEST & MEASUREMENT
Nearly 700 deals completed in 2019 involving a UK manufacturer, with 30% of these representing cross-border transactions. 133 UK businesses were acquired by international groups, with the US continuing to dominate, targeting the UK as its natural home from home. Meanwhile, UK investors acquired 120 targets abroad, shoring up interests in Europe and US markets.
Engineering represents largest share of deals
Engineering represents largest share of deals
Manufacturing remains a critical sector in both advanced and developing countries, and at BDO we are proud to work with so many exciting industrial businesses across the globe.
Internal and external forces are pushing innovation across the sector as businesses grapple with the opportunities and challenges of Industry 4.0, digitisation and connectivity, the fast-developing green agenda, the growing role of developing economies, and an ever-shifting geo-political landscape. As the fifth largest economy in the world, the UK is home to many innovative businesses which are leading the charge on key issues, and frequently turning to M&A as a core means of achieving competitive advantage.
Our review of M&A activity involving UK manufacturing businesses in 2019 reveals a country that is very much open for business:
Manufacturing: a vibrant sector for M&A deals
A REVIEW OF THE PERFORMANCE OF AIM LISTED MINING COMPANIES FOR THE YEAR TO JUNE 2019
MANUFACTURING DEALS REVIEW 2019
20
16
12
8
4
2
FTSE 100 (excluding banks)
Average EBITDA multiples to March 2020
BDO average EBITDA analysis
0
6
10
14
18
02-01-20
02-01-19
02-01-18
02-01-17
02-01-16
02-01-15
02-01-14
02-01-13
02-01-12
02-01-11
02-01-10
02-01-09
FTSE 100 industrials
Nearly 700 deals completed in 2019 involving a UK manufacturer, with 30% of these representing cross-border transactions. 133 UK businesses were acquired by international groups, with the US continuing to dominate, targeting the UK as its natural home from home. Meanwhile, UK investors acquired 120 targets abroad, shoring up interests in Europe and US markets.
Engineering represents largest share of deals
Engineering represents largest share of deals
Manufacturing remains a critical sector in both advanced and developing countries, and at BDO we are proud to work with so many exciting industrial businesses across the globe.
Internal and external forces are pushing innovation across the sector as businesses grapple with the opportunities and challenges of Industry 4.0, digitisation and connectivity, the fast-developing green agenda, the growing role of developing economies, and an ever-shifting geo-political landscape. As the fifth largest economy in the world, the UK is home to many innovative businesses which are leading the charge on key issues, and frequently turning to M&A as a core means of achieving competitive advantage.
Our review of M&A activity involving UK manufacturing businesses in 2019 reveals a country that is very much open for business:
Manufacturing: a vibrant sector for M&A deals
A REVIEW OF THE PERFORMANCE OF AIM LISTED MINING COMPANIES FOR THE YEAR TO JUNE 2019
MANUFACTURING DEALS REVIEW 2019
FTSE 100 (excluding banks)
FTSE 100 industrials
02-01-20
02-01-19
02-01-18
02-01-17
02-01-16
02-01-15
02-01-14
02-01-13
02-01-12
02-01-11
02-01-10
02-01-09
300
250
200
150
100
50
0
Index
Market cap of UK industrial groups has grown by 137% (to March 2020)
BDO Market Cap Index
Click for chart:
US continues to dominate as acquirer
Click for chart:
BDO EBITDA multiple analysis
Internal and external forces are pushing innovation across the sector as businesses grapple with the opportunities and challenges of Industry 4.0, digitisation and connectivity, the fast-developing green agenda, the growing role of developing economies, and an ever-shifting geopolitical landscape.
As the fifth largest economy in the world, the UK is home to many innovative businesses which are leading the charge on key issues, and frequently turning to M&A as a core means of achieving competitive advantage.
EV/EBITDA multiple
Private Company Price Index (PCPI)
Recent publications
2020 OUTLOOK
After a steady level of M&A activity during 2019, Q4 2019 was beset by delays and slow deal processes, with a number of acquirers and business owners waiting to see how political events in the UK would unfold.
The decisive outcome of the General Election had the initial effect of spurring activity, however the COVID-19 pandemic has put many M&A processes on hold and is expected to inflict a distinct blow to the global economy this year.
Businesses we speak to are keen to reengage with M&A activity in due course, once the virus and its effects are behind us.
Against this backdrop, it is more important than ever to count on quality advice. We care about your business and the issues you face, and invite you to get in touch to discuss your concerns and plans.
COVID-19 - Recovering from a crisis and boosting resilience
Make UK/BDO Manufacturing Outlook Report
The Resilience Health Check
Equity investment in Accucam Machining by Fulcrum Capital Partners
Sale of P Rieger Werkzeugfabrik, to Sphinx Werkzeuge
Acquisition of Geiger Fertigungstechnologie by Zhejiang Tieliu Clutch
Sale of Security Steel to Dayton Parts
Guangzhou Haozhi Industrial
Accucam Machining
WE solutions
Security Steel
P. Rieger Werkzeugfabrik
Zhejiang Tieliu Clutch Co
Guan Chong Berhad
OK NUTRIPET
Credo Partners
It's All Good Limited
Sale of Schouten Vleeswaren to Group of Butchers
Sale of HT Griffin Food Ingredients to Caldic
HT Griffin Food Ingredients
Sale of HT Griffin Club des Millionaires to Ocean Brands
HT Griffin Club Des Millionnaires
Sale of Sylvain & CO to Bell Food Group
Sylvain & CO
Sale of Ojah to Kerry Foods
Ojah
Investment by The Craftory in NotCo
The Craftory
Group of Butchers
Sale of Big 3 Precision from TVV Capital to The Eastern Co
The Eastern Co
Licaplast Industries
Merger of Parkway Products and Littlestar Plastics
Investor buy-out led by Lochem Invest of Heerbaart Jongman Metaal
Heerbaart Jongman Metaal
Parkway Products
India Infoline investment in Parksons Packaging
India Infoline
Bewi Drift
Acquisition of Atlantic Trading by Bewi Drift
Acquisition of Rivièra Product Decorations by Berk Partners
Berk Partners
Blantyre Captial
Sale of majority stake in Bavak to OxGreenfield
Acquisition of ATS by Amada
BERMAD CS
Amada
Sale of SGA Conveyor Systems to BÖWE SYSTEC
Böwe Systec
Fundraising for TartanSense led by Omnivore, Blume Ventures, and BEENEXT
Sale of Innovation Associates to Allomer Capital Group
Innovation Associates
Sale of Mechtronic to Kawe
Satema
General Transmissions
Acquisition of Meyer Burger's wafering technology by Precision Surfacing Solutions Group
Precision Surfacing Solutions Group
Acquisition of Libra Industries by CapitalWorks
CapitalWorks
Sale of Lumi Parts Beheer to S de Leeuw
Lumi Parts Beheer
Sale of DPM Europe, DPM Singapore and Lilley and Gillie Charts to Global Navigation Solution
Global Navigation Solutions
Sale of Vallentin Elektronik to Chemo Electric
Indutrade
Azelis
Plasticos Compuestos
Sale of Novartis and Clariant industrial parks to GETEC
Novartis and Clariant
Acquisition of Inland Environmental Resources’ Magnesium Hydroxide Liquid (MHL) specialist by Calix
Calix
Sale of Codyeco to Smit & Zoon
Smit & Zoon
Merger of Schaetti and Dakota
Schaetti and Dakota
Acquisition of Taran Colour and Chemical by Debro
Debro
Investment in AlgoSource, Fonto de Vivo and Mascara by Go Capital
Go Capital
DMB Dr. Dieter Murmann Beteiligungsgesellschaft mbH
Omnivore
Meritas Group
Richbloom
Atlas Technical Consultants
Investment in FreshVnF by Equanimity Ventures
Equanimity Ventures
Partnership between Greenlight Innovation and AVL
AVL
BDO is one of the world’s top sources of corporate finance advice in the Industrials sector, and we would be happy to help discuss the current position and your future plans when the timing is right for you.
Listed Industrials businesses outperformed the FTSE 100 between 2009 and 2020, with market capitalisation and valuations seeing impressive growth during that period. The average EV/EBITDA multiple for UK industrials group now stands at 14x compared to 12x for businesses in the FTSE 100
Acquisition of Huber-Schindler by Vorwerk International
Sale of Nextgen Technologies to Shermco Industries
Shermco Industries
Acquisition of Askams Compliance Services by Lucion Services
Lucion Services
Vallentin Elektronik
As has been seen during the global spread of COVID-19, manufacturing remains a critical sector in both advanced and developing countries. At BDO we are proud to work with so many innovative and resourceful industrial businesses across the globe.
Omnivore
Mechtronik
OxGreenfield
Vorwerk International
MANUFACTURING DEALS REVIEW
UNCERTAIN DEAL VOLUMES IN 2020
BDO UK
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Capital IQ
Source: Capital IQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Experian MarketIQ
Source: Capital IQ
Source: Capital IQ
COVID-19 - Recovering from a crisis and boosting resilience
Make UK/BDO Manufacturing Outlook Report
