IMI Seeks Purchases With Up to $1.6 Billion to Spend

(Corrects to remove Greek acquisition in eighth paragraph.)

IMI Plc (IMI), a U.K. provider of engineering equipment and services, plans to pick up its pace of acquisitions in the energy industry after buying a Canadian company that serves refineries.

IMI may spend as much as 1 billion pounds ($1.6 billion) on purchases over the next five years, Chief Executive Officer Martin Lamb said today in a phone interview.

“We have the capacity to make larger acquisitions,” Lamb said after Birmingham, England-based IMI reported first-half earnings that exceeded analysts’ estimates. “We love things like liquefied natural gas and the petrochemical opportunities are growing for us.”

IMI is interested primarily in the energy industry as shale gas development in the U.S. boosts opportunities for it to serve petrochemical producers. The maker of valves for the control of liquid and gas flows also can benefit from nuclear energy expansion in China, Russia, India and Korea, the CEO said.

IMI shares rose as much as 6.5 percent, the biggest intraday gain since March 7, and were up 5.1 percent at 1,481 pence at 12:24 p.m. in London. That was the biggest advance among companies on the FTSE 100 Index. (UKX) IMI stock has gained 35 percent this year, valuing the company at 4.7 billion pounds.

The U.K. company may make a series of acquisitions of 100 million pounds to 120 million pounds each, Lamb said. IMI is well-placed to provide technology and services needed to upgrade nuclear power reactors to meet new safety standards, he said. There are already 432 operable civil reactors, according to the World Nuclear Association.

Canadian Purchase

IMI said today it bought Quebec-based Analytical Flow Products for 5 million pounds and may pay an additional 36 million pounds over the next five years based on performance.

The company last year acquired Italian oil-field engineering company Remosa SpA and Brazilian valve manufacturer Grupo InterAtiva, for 100 million euros and 22 million pounds respectively.

“Value-enhancing acquisitions” will feature in IMI’s future, Scott Cagehin, an analyst at Numis Securities, wrote today in a note. “Despite uncertain economic conditions, margins should remain robust with positive pricing initiatives, sales mix and cost reduction benefits,” said Cagehin, who raised his share-price prediction 11 percent to 1,550 pence.

IMI, which also makes dispensers for soda pop, posted a 1 percent increase in adjusted pretax profit in the first half to 170 million pounds, exceeding the average analyst estimate of 164 million pounds in a Bloomberg survey. Revenue was little changed at 1.09 billion pounds, while IMI said it anticipates better trading conditions in the second half of the year.

IMI rose to its highest in at least 25 years on July 19 after Citigroup Inc. named it one of its most preferred stocks, saying that the company has “further significant margin upside.”

To contact the reporter on this story: Eshe Nelson in London at enelson32@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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