LONDON (ShareCast) - (ShareCast News) - Specialist technical fluid power products supplier Flowtech Fluidpower announced what it described as the "further strengthening" of its process division through the acquisition of Orange County (OCL) on Monday.
The AIM-traded firm said it completed the acquisition of the business and assets of OCL, a UK supplier and distributor of products for the storage and movement of fuels, liquids and gases, on Friday.

OCL was founded in 1994 and reportedly holds a "market leading position" in the UK.

The business employs 18 people at its site in Spennymoor, County Durham, and would operate as an independent company within the Flowtech Group, continuing to be managed by the current executive management team who had been in place for many years, reporting directly to Flowtech's CEO, Sean Fennon.

"The acquisition provides a further complementary business to the group, and establishes relationships with world-leading manufacturers of pipes, valves, gauges and leak detection equipment, including Brugg Pipesystems in Germany and Ebsray Pumps in Australia," Flowtech's board explained.

"It is focused on technical sales, provided by experienced sales engineers to a wide range of end users from fuel supply systems for the automotive industry to cooling systems on the London Underground, as well as large data centres across the UK."

For the year ended 31 December 2016, OCL achieved sales of £4.1m, producing EBIT of £1m.

Net assets excluding net cash at the same date were £0.8m.

As well as some immediate back office savings, the group said it expected to deliver "synergy opportunities" over the medium term by exploiting the OCL offer across the group's wider customer base, as well as enhancing internal supply arrangements.

The acquisition was being funded from Flowtech's own resources, and comprised £1.5m on completion with additional payments expected to be around £2.1m, subject to an earn-out over the 24-month period to 30 June 2019.

Flowtech said the maximum consideration payable was £9.0m.

In addition, the group would pay a sum of £1.7m - equivalent to the net cash resources of OCL - at the same date.

With adjustments to the salary base for the management team post-acquisition and current exchange rates reducing margins from previous highs, the board said it expected OCL to contribute annual EBIT of around £0.6m in the short to medium term.

"OCL is the third acquisition we have made this year and we are delighted to expand our knowledge base, add complementary technical products and skilled engineers to the group's already robust customer offering," said Flowtech Fluidpower CEO Sean Fennon.

"We take this opportunity to welcome all new colleagues to the group and see this momentum as an exciting opportunity for everyone.

"We remain committed to our strategic objective of building a focused ... group that serves a wide number of industry sectors."

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