Acquisition

21 May 2007 07:03

Renold PLC21 May 2007 Renold plc("Renold" or the "Group") Acquisition in China Renold is pleased to announce the acquisition of a 90% interest in theindustrial chains manufacturing business of HangZhou ShanShui ("HZSS"). HZSS, operates from a large production plant based in Zhejiang Province,People's Republic of China, has annual turnover of approximately US$9m and morethan 400 highly skilled employees. This workforce will represent about 30% ofRenold's worldwide employees directly involved in the manufacture of chains. Theagreed price of US$4m represents net asset value and will be settled in cash.The acquisition will significantly increase the Group's future availablemanufacturing capacity, and will remove the need for US$8m of budgeted capitalexpenditure for this year. The acquisition, which has received regulatory approval in China, and which isexpected to complete in June, will significantly increase the percentage ofRenold production in low cost countries ("LCCs"). The Group's "PACE" objectiveof growing headcount in LCC chain manufacturing to over 40% of the Group totalby the end of 2008/9, was set out in the Group's announcement of 8 March 2007. The acquisition also reinforces the Company's position as a global leader in themanufacture of industrial chains by opening up new markets and customers inChina and South East Asia. The business will be called Renold Hangzhou, and is expected to increase groupsales and be earnings enhancing after 12 months. The outlook for the sectorsthat it serves remains broadly positive with particular opportunities in itsdomestic markets. An update on the progress of "PACE" and the impact of this acquisition will beincluded in the results announcement for the year to 31 March 2007 which isexpected to be released in June. Bob Davies, Chief Executive of Renold, commented: "The purchase of this substantial Chinese manufacturing facility will underpinthe execution of our 'PACE' restructuring and will boost margins to a run rategreater than 10% by 2008/9." "HZSS has the strongest technology of all the potential acquisition targets welooked at. It also provides a major growth opportunity in the domestic Chinesemarket and into other parts of South East Asia." 21 May 2007 Enquiries: Renold plc 0161 498 4517Bob Davies, Chief ExecutivePeter Bream, Finance Director College Hill 020 7457 2020Matthew GregorowskiNicholas Potter NOTE FOR EDITORS: Renold is a leader in the manufacture of industrial chains and also manufacturesa range of gears and couplings which are sold throughout the world to a broadrange of original equipment manufacturers and distributors. Its products areused in a wide variety of industries including manufacturing, transportation,energy, steel, and mining. Renold has a well deserved reputation for qualitythat is recognised worldwide. The Group has 13 manufacturing plants throughout the world and employs 2500staff. It is currently expanding its geographical footprint by increasing itsmanufacturing presence in "low cost countries". Further information about Renold can be found on the website www.renold.com This information is provided by RNS The company news service from the London Stock Exchange