Will Cooper play safe with MTL?
25 Mar 2008
Texas-based Cooper Industries' £144-million acquisition of the MTL Instruments Group will require clear vision if the latter company is to continue along its adventurous growth path — and not go the way of many ill-fated trans-Atlantic acquisitio
Houston, Texas-based Cooper Industries' £144-million acquisition of the MTL Instruments Group will require clear vision if the latter company is to continue along its adventurous growth path — and not go the way of many ill-fated trans-Atlantic acquisitions in the wider business world.
Founded in 1971 as a spin-off from Kent Instrumentation — now integrated into ABB — Luton, UK-based MTL has seen its sales accelerate toward the £100-million mark in recent years. With around 900 people, the company's main manufacturing base remains in Luton, which produces 51% of its products, with the remaining 49% produced at a facility in Chennai, India.
MTL is best known for its skills in the hazardous area environments, especially the oil & gas sector — its largest market — petrochemicals and chemicals industries, as well as the pharmaceutical processes involving dusts and fine powders. It also supplies into the pulp & paper, food & beverage and telecoms sectors.
Around 60% of MTL's products go to process automation companies, with the remaining 40% sold direct to end-users. In value terms the roles are reversed, with direct sales supplying 60% of income, reflecting the added-value service and support activities.
MTL anticipates 2007 sales of £105 million when recent acquisitions — Ocean Technical System (SCADA), RTK (process alarm products), both of the UK and Australian firm Elpro (wireless technology) — are factored in. Profit margins are running at about 10% in a market that chief executive Graeme Philp described as "extremely kind to us of late."
With 2007 sales of $5.9 billion —87% from electrical products — and 31,000 employees, Cooper Industries operates eight divisions: Cooper B-Line, Cooper Bussmann, Cooper Crouse-Hinds, Cooper Lighting, Cooper Safety, Cooper Power Systems, Cooper Wiring Devices and Cooper Tools Group.
Cooper described MTL as in line with its strategy of "building upon the existing explosion-proof electrical products platform; adding significant technology offerings for our customers in harsh and hazardous environments; and enhancing our global footprint."
The new US owner will position MTL as a sub-division of its Cooper Crouse-Hinds business, which provides the electromechanical devices for power delivery applications, including in the facilities of many MTL customers.
Cooper Crouse-Hinds does not supply intrinsic safety (IS) products since selling its Buehl, Germany-based Intrinsic Safety Instrumentation (ISB) business to Pepperl+Fuchs — one of MTL's main competitors — in 2006.
MTL "will accelerate the growth of Cooper Crouse-Hinds within the global petrochemical and energy markets," said Kirk Hachigian chairman and CEO of Cooper Industries. "Additionally, we can leverage MTL's technology assets in process automation and instrumentation to build the next generation of intelligent explosion-proof products."
However, the acid test for the takeover will be how Cooper develops the MTL business in the wider process market — both organically and through acquisition.
"While hazardous area products are the most obvious synergies, Cooper is at least as much interested in MTL's newer technology businesses, several of which are outside the traditional hazardous area markets," insisted Philp.
In revenue terms the majority of MTL's sales are now outside the intrinsic safety area with the split "probably" running at "about 40% intrinsic safety and 60% outside of that," according to Dermot Coady, marketing director of MTL.
The newer technologies, added Coady "are going to drive the possibilities of the company in the coming years." He listed the target growth areas as including industrial Ethernet, wireless, Foundation Fieldbus devices and cyber security.
"MTL will develop a range of open system products to support the architecture of tomorrow's plant," said Coady. "We aim to be a major supplier of process control hardware for DCS providers, system integrators, end-users and engineering contractors."
Meanwhile, MTL plans to move into a new worldwide HQ and manufacturing centre on the northern edge of Luton during 2009. "This building offers significant expansion space both for offices and for manufacturing over MTL's existing Luton site and shows our confidence in the continuation of UK-based manufacturing for MTL," concluded Philp
Founded in 1971 as a spin-off from Kent Instrumentation — now integrated into ABB — Luton, UK-based MTL has seen its sales accelerate toward the £100-million mark in recent years. With around 900 people, the company's main manufacturing base remains in Luton, which produces 51% of its products, with the remaining 49% produced at a facility in Chennai, India.
MTL is best known for its skills in the hazardous area environments, especially the oil & gas sector — its largest market — petrochemicals and chemicals industries, as well as the pharmaceutical processes involving dusts and fine powders. It also supplies into the pulp & paper, food & beverage and telecoms sectors.
Around 60% of MTL's products go to process automation companies, with the remaining 40% sold direct to end-users. In value terms the roles are reversed, with direct sales supplying 60% of income, reflecting the added-value service and support activities.
MTL anticipates 2007 sales of £105 million when recent acquisitions — Ocean Technical System (SCADA), RTK (process alarm products), both of the UK and Australian firm Elpro (wireless technology) — are factored in. Profit margins are running at about 10% in a market that chief executive Graeme Philp described as "extremely kind to us of late."
With 2007 sales of $5.9 billion —87% from electrical products — and 31,000 employees, Cooper Industries operates eight divisions: Cooper B-Line, Cooper Bussmann, Cooper Crouse-Hinds, Cooper Lighting, Cooper Safety, Cooper Power Systems, Cooper Wiring Devices and Cooper Tools Group.
Cooper described MTL as in line with its strategy of "building upon the existing explosion-proof electrical products platform; adding significant technology offerings for our customers in harsh and hazardous environments; and enhancing our global footprint."
The new US owner will position MTL as a sub-division of its Cooper Crouse-Hinds business, which provides the electromechanical devices for power delivery applications, including in the facilities of many MTL customers.
Cooper Crouse-Hinds does not supply intrinsic safety (IS) products since selling its Buehl, Germany-based Intrinsic Safety Instrumentation (ISB) business to Pepperl+Fuchs — one of MTL's main competitors — in 2006.
MTL "will accelerate the growth of Cooper Crouse-Hinds within the global petrochemical and energy markets," said Kirk Hachigian chairman and CEO of Cooper Industries. "Additionally, we can leverage MTL's technology assets in process automation and instrumentation to build the next generation of intelligent explosion-proof products."
However, the acid test for the takeover will be how Cooper develops the MTL business in the wider process market — both organically and through acquisition.
"While hazardous area products are the most obvious synergies, Cooper is at least as much interested in MTL's newer technology businesses, several of which are outside the traditional hazardous area markets," insisted Philp.
In revenue terms the majority of MTL's sales are now outside the intrinsic safety area with the split "probably" running at "about 40% intrinsic safety and 60% outside of that," according to Dermot Coady, marketing director of MTL.
The newer technologies, added Coady "are going to drive the possibilities of the company in the coming years." He listed the target growth areas as including industrial Ethernet, wireless, Foundation Fieldbus devices and cyber security.
"MTL will develop a range of open system products to support the architecture of tomorrow's plant," said Coady. "We aim to be a major supplier of process control hardware for DCS providers, system integrators, end-users and engineering contractors."
Meanwhile, MTL plans to move into a new worldwide HQ and manufacturing centre on the northern edge of Luton during 2009. "This building offers significant expansion space both for offices and for manufacturing over MTL's existing Luton site and shows our confidence in the continuation of UK-based manufacturing for MTL," concluded Philp
