GMR Group, a leading manufacturer of pumping equipment and engineering solutions for flow control in Russia and the CIS, today announces that it has signed an agreement to acquire 75% of Apollo Goessnitz GmbH, manufacturer and supplier of specialized pumping equipment and engineering solutions based on it for major projects around the world, located in Gesnits (Thuringia), Germany.
Products Apollo Goessnitz GmbH (Apollo) is used in specialized solutions for the oil industry, the technology of oil production as offshore platforms and so on land for thermal power, chemical plants and water management. The product portfolio of the company includes centrifugal pumps manufactured in accordance with API (American Petroleum Institute) and DIN (German Standards Institute) and spare parts for them, as well as integrated solutions based on pumping equipment. The structure of the company consists of two business divisions: "Pumps" and "Systems Engineering". The bulk of sales come from the regions of Western Europe, the Middle East and Africa, and through a network of specialized companies, agents or directly EPC-global companies.
Apollo company has undertaken a number of deliveries for several large international projects, including:
- Complete pump systems for the transportation of petroleum products to order GS Engineering & Construction (South Korea) for the project Sohar 2/Barka 3 in Oman.
- Pumps for critical applications, manufactured in accordance with API, commissioned by Siemens for the project Suaibah III in Saudi Arabia.
- Recirculation pump is used in the process of scrubbing, manufactured in accordance with API, for the project AIBEL / Statoil.
HMS Group will pay 25 million euros for a 75% stake in Apollo. The transaction is financed entirely by borrowing. This interest is purchased from the company’s management, which will be part of a new management team formed jointly with the Group. The transaction price is calculated by multiple EV / Revenue 2012 (ozhid.) would be 1.57, and by multiple EV / EBITDA 2012 (Timeout) — 8.7.
The main factors that determine the feasibility of acquiring Apollo:
- The deal will allow the Group to expand the product offering HMS supplementing it with pumps manufactured in accordance with API for petroleum, petrochemical and chemical industries, which could lead to an increase in the Group’s share in the market of high-tech pumps manufactured in accordance with API, for oil refining in Russia and CIS , which is currently dominated by a few multinational companies. According to the research agency Frost and Sullivan, the Russian market of pumping equipment for oil refining and petrochemical industry is estimated at $ 76.5 million at the end of 2010, while the average annual growth rate for the period from 2010 to 2015 is expected to reach 20, 3%. A number of large investment projects aimed at increasing the depth of processing, as well as government-supported transition from Euro 4 to Euro 5 will lead to increased demand for new equipment needed for the upgrade process. It is expected that the total proportion of HMS Group in the market, including the percentage of Bobruisk Machine Building Plant, acquired in 2011, will rise to 30-33% in 2015
- Well-established sales channels and long-term relationships with customers of HMS Group will increase the sales of specialized pumps manufactured by Apollo European DIN standard API and various generating companies, as well as EPC-companies operating in the thermal power industry in Russia and the CIS.
- R & D co-operation between departments and subsidiaries Apollo HMS Group, located in Russia and the CIS, will produce high-tech pumping systems on the basis of pumps Apollo, manufactured according to API, with significant potential for localization and the ability to increase profitability.
- Joint participation in international engineering projects and experience of the international supply HMS Apollo will enable the Group to increase the share of international sales revenue.
CEO of HMS — Molchanov AV commented on the transaction took place:
"Due to the considerable prospects for modernization and new capacity in the refining and petrochemical industries in Russia and the CIS, the goal is to significantly strengthen the Group’s position in these attractive market segments. I welcome the fact that Apollo is a successful growing company with an international presence, specializing in pumps, manufactured by API and DIN standards for these industries. In addition, the strategy for the development of Apollo R & D and increased specialization in the field of engineering solutions, especially in the field of offshore oil production platforms and presents particular value to us, as the Group has always been committed to providing its customers with high-end solutions. This acquisition will allow us to strategically expand the ability of the Group in the field of engineering and research and development. For the Group, this is the second deal to acquire assets in the current year and from now on we are going to focus on the integration of the acquired assets and the implementation of synergies to maximize shareholder value of the Group. "
Lothar Wagner, managing director of Apollo, said:
"We were looking for a partner who along with their own strong position in the market, would give us the opportunity to develop into attractive and rapidly growing markets of Russia and CIS countries. GMR Group, as a strategic partner, has all the necessary resources to develop new products and solutions. We have analyzed the history of the integration of the previous assets of HMS Group and I am convinced that the development of Apollo in the Group will be successful. The existing management of our company will continue to participate in the management of the company and is ready to implement all of the opportunities that arise as a result of this transaction. "
ApolloGoessnitz specializes in the production of specialized centrifugal pumps and systems based on them, used in oil and gas processing, chemical and petrochemical plants, thermal power and water industries, mining and offshore oil platforms, as well as in the transportation of oil and gas. Equipment produced Apollo, complies with API 610 (American Petroleum Institute) DIN (German Standards Institute) and ISO (International Organization for Standardization). The structure of the company consists of two business divisions: "Pumps" and "Systems Engineering" (design and manufacture of production lines for liquid fuel, refining processes, water supply systems, instrumentation and automation). In 2011, revenue Apolloamounted to 20.3 million euros, net debt amounted to EUR 1.6 million and net income of 1.3 million euros.
"HMS Group" is one of the largest in Russia and the CIS manufacturer of pumping equipment for oil and gas, energy, housing and utilities and water management, one of the leading manufacturers of modular oilfield equipment, as well as a fast growing engineering company that performs a wide range of design, construction, installation and commissioning works on the complex arrangement of objects of oil and gas production and water conservancy facilities. Revenue "HMS Group" IFRS for Q1 2012 amounted to 7.3 billion rubles., Adjusted EBITDA— 1.2 billion rubles., Net profit 485 million. rub. Global Depositary Receipts "HMS Group" (GDR) Are traded on the London Stock Exchange under the symbol "