Oerlikon Buys Coatings Unit From Sulzer for $1.1 BillionPatrick Winters
OC Oerlikon Corp. agreed to buy a Sulzer AG unit that makes coatings for machinery and airplane engines in a deal valued at 1 billion Swiss francs ($1.1 billion) to broaden its customer base.
The Metco division will be absorbed by Oerlikon’s Balzers division, creating a spray coatings supplier with 1.2 billion francs in sales, Pfaeffikon, Switzerland-based Oerlikon said in a statement today. Viktor Vekselberg is the largest shareholder in both Sulzer and Oerlikon through his Renova Group.
The deal ends a six-month sale process, with the job of integrating Metco falling to Chief Executive Officer Brice Koch, who joined from ABB Ltd. this month. Oerlikon has been seeking to deploy 470 million francs from the sale of a natural-fibers business to China’s Jinsheng group in July. Oerlikon plans to form a new division called Surface Solutions to house brands such as Balzers and Metco.
“By putting the two together we create a world leader in surface solutions, also in terms of the footprint, customer access, service, and aerospace markets, which Metco has,” Koch said in an interview today.
Credit Suisse advised Sulzer on the sale. The value of the deal given is based on enterprise value. Oerlikon gained 3.2 percent to 14.35 francs in Zurich as of 9:27 a.m., while Sulzer added 2.8 percent to 139.7 francs.
Koch said he’s not expecting to eliminate any jobs, and Oerlikon retains the financial muscle to do additional acquisitions.
Pumpmaker Sulzer expects cash pretax proceeds of about 850 million francs from the deal, with management focused on units serving the oil and gas, power and water markets. Closure of the transaction is expected in the third quarter. Metco, with sales of 690 million francs, accounted for 17.2 percent of Sulzer’s sales in 2012.