UK-based MTL Instruments Group has announced the acquisition of Australia-based Elpro International for A$28.5m (about US$20m). Elpro is profitable and growing, and the acquisition price represents about 2.5 times annual sales, a sweet deal all round. MTL is a $175M public company and paid cash, funded with available bank debt.

Elpro already had VC involvement looking for an exit so the sale was no surprise. A small crowd of companies were interested (industrial wireless is hot these days) including some of the big gorillas in our market. The fact that Elpro management were significant shareholders swung the deal.

Complementary Cultures

Graham Moss, CEO of Elpro comments, "The MTL acquisition is a friendly take-over. Elpro was too small and too remotely based to stand alone once wireless was accepted as a mainstream technology in America and Europe. MTL was at the top of our list of potential buyers and we see a close fit with their corporate style and philosophy. We take some pride in the fact that MTL sees similar characteristics in Elpro. All Elpro's senior managers are continuing with the company and are very enthusiastic about the growth potential as part of MTL."

Says Graeme Philp, MTL Group CEO, "The cultural fit of is excellent and the chemistry was good from first meeting. We are like minded engineers who run companies. We were very impressed by the Elpro team - they have some very good people in Brisbane and around the world. We are very confident that our group structure and our management style allows us to operate successfully with geographically distributed businesses.

Good Strategic Fit

Wireless is becoming increasingly important in industrial markets for signal and data transmission within plants and between remote facilities. Elpro brings solid and reliable radio technology to MTL to fuel future growth in this arena. This is a superb strategic fit for MTL which is a world leader for products in hazardous environments in the petrochemical, chemicals and oil & gas industries.

Elpro will extend its international customer base by leveraging MTL's existing sales channels and OEM relationships. Plus it will complement MTL's Open Control Components portfolio, adding wireless capability as end-users seek to add more I/O points without hard-wiring.

Organization:

Elpro will continue to be run as a separate legal entity with its own management, P&L and strategy. This works well with other MTL Group business units, with optimum mix of central co-ordination and local autonomy.

Graham Moss of Elpro will continue to be the CEO of Elpro, and Frank Williams (previously with Action Instruments) will continue to run Elpro in the Americas.

Elpro will work with other MTL Industrial Networking companies under an Industrial Network business unit (headed by Ian Verhappen) which will cover Foundation Fieldbus, Industrial Ethernet, Data security, Optical data transmission and Wireless.

Jon Malins is Chief Technical Officer (CTO) at MTL, responsible for several major MTL product developments which have contributed to growth & success. Jon will continue to be responsible for ensuring that technologies are shared around the MTL Group and that key engineering resources are available to all business units. He will continue to have the same overseeing role for Elpro as for all other MTL group operations.

For Elpro manufacturing, final assembly will be kept within the Elpro facility in Brisbane, Australia. Local sub-contract suppliers will be benchmarked against MTLs own global assembly operations.

Conclusion

There's a lot of hype surrounding industrial wireless - some of it fueled by your truly (smile). It's clear to me that MTL has a practical and realistic view which will bring results.

Related links:

Press Release: MTL Instruments Group acquires Elpro

Automation.com Corporate Culture Series - MTL Has Crossed $100M

Wireless Growth Paradigms