Switzerland's Oerlikon Acquires Sulzer's Coating Division Metco For $1.1 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Technology conglomerate OC Oerlikon (OP:OERLY) (Pfaffikon, Switzerland) signed an agreement to acquire Metco, a coatings division of Sulzer (OP:SULZF) (Winterthur, Switzerland), in a deal valued at $1.1 billion. The agreement is subject to merger control and regulatory approval.

Metco, the world's largest maker of thermal spray coatings for the automobile, chemical and energy industries, will be absorbed by Oerlikon's Balzers division, Oerlikon said in a statement. Oerlikon said it plans to combine Metco with its existing coatings business to increase its market access. The combined business will operate about 130 facilities and employ about 6,000 people.

"This step marks an important milestone for the Oerlikon Group, creating the technologically leading global product and service company for Surface Solutions," said Oerlikon CEO Brice Koch.

The combined businesses will form the new Surface Solutions Segment and have pro-forma sales of $1.31 billion in 2012, constituting approximately 33% of group sales. It will be the largest segment within the Oerlikon Group, and it will be led by Hans Brandle as Segment CEO.

"The combination of Balzers and Metco under one umbrella is a perfect fit of technologies, business models, R&D activities and market access for the benefit of our customers," Brandle said.

"We are pleased that we have found a new owner for the Sulzer Metco division that will leverage the strengths of the business in the best possible way," Sulzer CEO Klaus Stahlmann said in a separate statement. "This transaction is an important step to focus Sulzer's activities on the three attractive key markets oil & gas, power and water."

After the divestment, almost 80% of Sulzer's sales will be in oil & gas, power and water. Sulzer intends to use the funds generated from the divestment for targeted acquisitions and further investments toward organic growth in these markets. Sulzer expects cash pretax proceeds of about $940 million from the deal, with management focused on units serving the oil and gas, power and water markets.

Metco had sales of $774 million in 2012. It employs about 2,400 people.

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