Sunday, 4 September 2016

Spectris gobbles up Millbrook in £122 million deal

Rutland Partners only wanted the former General Motors/Vauxhall Motors’ proving ground at Millbrook for one thing, and one thing only – to make money.
A quick return on its investment. Rutland’s heart was not really behind the venture. It had no interest in motor vehicle testing at all. Millbrook did not fit into its 'portfolio'.
That is how rank and file employees of Millbrook, Bedfordshire might view it. Yes, they could see the new owner Rutland polishing up the brass-work on the front door, cleaning the paintwork and polishing the windows, putting on a new front gate for the ‘house’ they had just purchased; oh, and buying the ‘garage’ next door just to make the sale more attractive – vendor perfect.
But nowhere in sight was there evidence of real ‘long-term’ vision; no real long-term plans. No sign of a 'strategic plan' - except to 'sell on'. Venture capitalists do not work that way; that is, developing strategic plans for acquisitions. Remember Sun Capital and the acquisition of van maker LDV Group of Ward End, in Birmingham? Where is LDV now? Buried in GAZ. Lost for ever!
As MIllbrook employees watched helplessly (and enviously?) as the MIRA Proving Ground and its associated automotive engineering, wind tunnel and engine test facilities in Nuneaton passed into Japanese ownership, care of the Horiba group, they could at least console themselves with the simple fact: when it comes to vehicle and engine test capability, especially in the touchy area of emissions, Horiba knew what it was doing. Horiba is emissions testing.
Horiba has made great inroads into the UK through the likes of JaguarLandRover, surely its biggest UK customer. And with the acquisition of MIRA, Horiba has put itself in the driving seat for the next major phase of automotive development – namely driverless vehicles. MIRA’s facilities will no doubt play an essential part in this work.
But in Bedfordshire, rank and file workers at Millbrook face a new future as FTSE 250 company Spectris has paid Rutland Partners and the company's management a total of £122 million for Millbrook Group Limited, using its existing finances. Millbrook has vehicle and engineering test facilities and tracks at its 665-acre site in Bedfordshire. It is used by SMMT and others for meetings and exhibitions. Last year, Millbrook expanded its scope with the purchase of a winter test facility inside the Arctic Circle in Finland.
                              A bolster for test facilities
The purchase is the latest of several deals for Spectris, as the company looks to bolster its testing facilities. Since the start of the year the company has ploughed more than £30 million into acquisitions, including Swiss group CAS Clean Air Service, and software businesses Discom and Capstone.
John O'Higgins, Spectris chief executive, said: "Millbrook represents our largest purchase to date of a pure testing services business. It is closely related to our existing instrumentation businesses and is an important step forward in our strategy to provide our customers with differentiated solutions that incorporate a combination of hardware, software and services.”
Millbrook has over 400 staff and is best known for vehicle tests, but is also used for the development of equipment used in the defence, security and petrochemical sectors. The business was established in 1968 and sold by General Motors in 2013 to become an independent operation. No purchase price has ever been disclosed. GM and Rutland agreed a blanket of total silence. It’s called client confidentiality.
The amount Spectris is paying for Millbrook, on a cash and debt-free basis, represents a multiple of 12 to 13 times earnings before interest, tax, depreciation and amortisation. In the year to the end of December 2015, Millbrook generated revenues of £48m and made a profit of £5.4 million.
Time alone will tell how this latest acquisition fares. And it remains to be seen if Spectris can step up to the plate and take on board the new technology of autonomous driving.
It is a technology that fills many with horror. Anything that is computer-based is dogged by uncertainty; unpredictability. How many airline captains have eased into their seats in a jumbo jet first thing in the morning and, before beginning their routine system checkout, ask: “Well, what’s the computer going to do today?”   Yet commercial vehicle platooning is seen as just one of the many potential areas of automated driving and the savings it can bring to fuel economy and improved road safety.

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