Dunedin-based niche engineering company Scott Technology has clinched a deal to buy a former German competitor out of liquidation - with work contracts already secured.
Scott's purchase of Somako Hirsch + Attig GmbH, near Frankfurt, establishes a beachhead manufacturing presence in Europe, joining factories already operating in Ohio in the US and Qingdao in China.
While Scott's German purchase cost less than €1 million ($NZ1.65 million), the annual revenue expected from the company was about €8 million ($NZ13.2 million), Scott's chairman Stuart McLauchlan said.
"It is good to be up and running from the start,'' Mr McLauchlan said when contacted yesterday.
Scott was able to buy selected business assets: plant and machinery, stock and work in progress and all the company's intellectual property, including designs and drawings for past, present and future projects.
"Project work has been secured in addition to the ongoing service and spare parts business and we're confident of having a productive first year of operation,'' he said.
The new subsidiary, Scott Technology GmbH, started trading last month from its leased premises in Kurnbach, one hour south of Frankfurt.
Mr Mclauchlan said Scott had two New Zealand staff in Germany and had rehired 36 of the company's former staff members, and intended to increase that number.
Mr McLauchlan said Somako Hirsh + Attig GmbH mainly produced automated assembly lines, like Scott's Christchurch plant, and had strong engineering and technical skills.
Its capability was similar to Scott's and it had competed against it at times.
Mr McLauchlan said Scott's European customer base was starting to grow but growth had been inhibited by the lack of a local presence.
"When we have a physical presence in a country we are taken more seriously in that market, having the technical back-up and services,'' he said.
He had no specific European countries or blocs to target, other than European Union members in general.
Mr McLauchlan predicted Scott's would be able to expand its business to deliver and support its products in the European market.
"We've already secured several contracts for automated systems that provide confidence we can achieve our business objectives for Europe,'' he said.
Mr McLauchlan said Scott Technology GmbH did not require a specific capital injection other than normal working capital.
Food giant JBS recently completed taking a controlling 50.1% stake in Scott, which benefited by more than $41 million.
Scott subsequently paid off all of its $16.6 million debt, leaving about $25 million cash in hand, which in part will to be used for acquisitions, such as the German purchase.
At a glance
Scott Technology sales and marketing offices
• New Zealand: Auckland, Wellington, Christchurch, Dunedin.
• United States: Dallas.
• Italy: Bergamo.
• China: Qingdao, Shanghai.
• Australia: Sydney, Melbourne, Perth.
• Chile: Santiago.
Manufacturing
Dunedin, Christchurch, Ohio, Qingdao, Kurnbach, near Frankfurt
