Aberdeen’s Wood Group has snapped up a piece of Detroit’s motor city as it branches into new markets and builds on its automation and control capabilities.
Wood has acquired CEC Controls Company, a management-owned designer and builder of industrial and process control systems primarily in the automotive manufacturing industry, in a deal worth up to $59million (£45.6million).
The Aberdeen-based company, which is currently leading a £2.2billion merger with rival Amec Foster Wheeler, said it would pay an initial £34million in cash up front for the business, with a further £11.6million payable over three years.
Established in 1966, CEC Controls is headquartered near Detroit. The company employs more than 220 across its 12 North American operations, as well as an office in Romania.
The deal further deepens Wood Group’s automation and control capabilities, following its 2015 acquisition of the Automated Technology Group (ATG), Bedfordshire-based industrial power control specialist.
CEC Controls’ current clients include Ford, GM and Fiat-Chrysler and the business will continue to be led by its existing management team. CEC Controls currently has gross assets of £26.3million and generated an EBITA of £7.4million in 2016.
Robin Watson, Wood Group’s chief executive said: “Bringing 50 years of expertise in delivering services to the automotive sector, CEC Controls significantly complements and strengthens the innovative technical solutions we provide to clients within automation and control.
“The acquisition supports the geographical broadening of our footprint within the automotive sector particularly in the US; deepening our presence in the key automotive hub of Detroit, where CEC Controls is headquartered.
“It also provides us the opportunity to further enhance the industrial process and control capabilities we offer to this industry and adjacent sectors including aerospace, logistics, water, and pharmaceuticals.”
President of CEC Controls, Robert Scheper said: “Wood Group’s global footprint and breadth of capabilities offers us the opportunity to enhance our client solutions and access significant international growth opportunities.
“We believe our extensive expertise in the automotive manufacturing industry, married with Wood Group’s two decades of experience in automation and control, creates a powerful solution-driven service offering for clients.”
Earlier this week, Wood Group revealed its merger with AFW would lead to a cull of 1,300 jobs across the group and that it was considering a sale of “the majority” of AFW’s North Sea business to appease competition concerns. The job cuts would amount to a 2% overall reduction in staff roles across the combined business.
The companies expect the reduction in manpower to deliver 60% of an annual cost savings target of £165million.
The deal, which was announced in March, is conditional on shareholder approval and clearances from competition authorities in Australia, Canada, Kazakhstan, Turkey and the UK.