Aggreko plc, a world leader in the supply of temporary power, temperature control and oil-free compressed air services, last week announced that it has signed agreements on two transactions. The first involves the purchase of the business and assets related to power rental of Cummins in India. The second involves the sale of Aggreko’s European oil-free compressed air rental business to Atlas Copco.
The purchase of the power rental business of Cummins India Ltd (CIL) is for a total consideration, payable in cash on completion, of INR291 million (about U.S. $5.7 million) and is subject to the approval of CIL’s shareholders. The business being acquired is forecast to have revenues in 2008 of about INR179 million (U.S. $3.5 million) and net assets at Dec. 31, of approximately INR79 million ($1.6 million).
The sale of Aggreko’s European OFA rental business to Atlas Copco is for a total consideration, payable in cash on completion, of €14.6 million (about U.S. $18.3 million). The European OFA business is expected to have revenues in 2008 of about €8.7 million (U.S. $10.9 million) and net assets at completion of approximately €5.0 million (U.S. $6.3 million). The transaction is subject to clearances by the relevant regulatory authorities.
Commenting on the transactions, Rupert Soames, chief executive of Aggreko, said, “These transactions are in line with our strategy of focusing our capital investment in growing markets where attractive returns can be achieved. Our investment in India means we will have achieved one of our strategic objectives, which is to have operations in each of the four largest developing economies in the world (the others being Brazil, Russia and China).”
Stockholm, Sweden-based Atlas Copco said the acquisition of Aggreko’s European oil-free air compressor rental business was in line with its strategy to expand the Atlas Copco Specialty Rental division.
The European OFA business has 25 employees. The deal includes about 200 compressors and dryers, which will be integrated into Atlas Copco’s existing European rental fleet, Atlas Copco said.
“This business is a perfect fit with our Specialty Rental division as they serve similar market segments and applications, broadening our customer base in Europe,” said Ronnie Leten, business area president, Atlas Copco Compressor Technique. “The acquisition supports the growth of Specialty Rental’s core business, rental of oil-free air equipment.”
“Oil-free air is the smallest of our product groups, and while we have a large and successful OFA rental business in North America in which we will continue to invest, we do not believe that our European OFA business has the scale to warrant further investment,” said Soames.
The deal closed last week, with the exception of operations in countries subject to anti-trust approval.
Aggreko was advised on the OFA transaction by Tricorn Partners LLP.
Aggreko’s North American operations, based in Houston are No. 13 on the RER 100.