Specialist manufacturer Avon Rubber has sold its US-based hovercraft skirt and bulk liquid storage tank business, for $9.25m (£6.58m).
Melksham-based Avon, which makes respirators for military, homeland security and first responder customers as well as rubber products for the dairy industry, said it had been reviewing strategic options for Avon Engineered Fabrications (AEF) – describing the business as non-core to its long-term strategy.
The sale to Illinois-based Performance Inflatables recognised the value of AEF for Avon Rubber while enabling the business to move forward independently, it said.
The acquisition of AEF, a leading supplier of industrial coated fabric goods to the US military, further boosts Performance Inflatables presence in the engineered inflatables sector.
Avon Rubber chief financial officer Nick Keveth said: “We are delighted to have concluded a transaction that recognises the value of AEF for Avon Rubber whilst enabling AEF to continue to thrive under new ownership. The outcome is a great result for Avon.”
AEF’s sale to Performance Inflatables, part of US investment group Pinewell Capital’s portfolio, was made on a cash and debt-free basis, giving Avon Rubber’s working capital a boost.
Avon Rubber posted an 11% increase in operating profits to £19.8m in the year to September 30 on revenues up 4.5% at £163.2m.
However, it said AEF had experienced ‘another soft year’ with revenues of £4m against £4.8m in 2016. This “reflected the variability in timing of certain DoD (US Department of Defense) procurement programmes for fuel and water storage tanks”, Avon said.
While AEF experienced strong order intake in the final quarter of 2017 and entered 2018 with an order book worth £4m, Avon said its acquisition strategy would result in the business losing the benefits it enjoyed under the US Small Business regime in the medium term.
As a result, it started to consider the future of the business, bringing in the Bristol office of FRP Advisory to investigate options.
FRP Advisory Bristol corporate finance partner Mark Naughton, who led the transaction supported by associate director Alex Sargeant, said: “Avon Rubber concluded that AEF was non-core to Avon Protection’s long-term strategy.
“We were engaged to find a buyer for the business that not only delivered value for shareholders but also provided a ‘home’ for the business that would enable it to continue to prosper in the future.
“We were delighted to find and secure US-based Performance Inflatables as the new home for the business.”
