Dutch group buys Wyko to create European market leader

Wyko, the UK`s largest supplier of engineering components, has been bought by the Dutch group, Eriks, for £139m. The deal creates a business with annual sales of €850m and a staff of 4,200, which Eriks claims will be "undisputed European market leader" in a wide range of engineering components, as well as in related technical and logistical services.

Eriks is buying Wyko from Royal Bank Investments, the private equity arm of the Royal Bank of Scotland, which funded a £92m management buyout at Wyko in 1999. Eriks is proposing that Wyko`s chief executive Bill Wilson and chief operating officer Mark Dixon join its board.

The Eriks group distributes mechanical engineering components in eight countries on three continents, through almost 50 group companies. It boasts a range of more than 500,000 items, more than 50,000 customers, and 2,000 employees.

The Wyko acquisition is in line with Eriks` objectives of: building a leading position in Western and Central Europe; being in the top three suppliers for all of its core activities in every region where it has branches; offering a wide range of quality mechanical engineering components; providing a high level of know-how; and having a balance between its MRO (maintenance, repair and overhaul) operations, and sales to OEMs.

The acquisition will give Eriks a strong foothold in the UK market in addition to its existing operations in the Netherlands, Belgium, Luxembourg, Germany and Poland. It also has branches in other European countries, the US and South-East Asia.

Eriks says that the takeover will generate "opportunities to realise cost savings" as well as expanding Wyko`s product range. It aims to boost Wyko`s EBITA (earnings before interest, taxes and amortisation) from around 5.5% of sales at present, to 7-7.5% within three to four years.

Wyko holds an estimated 10-15% share of the UK`s £1,400m motion controls MRO market, and generates an EBITA of around £13m on annual sales of some £240m. It employs more than 2,000 people.

Around 90% of Wyko`s sales are in the UK, with the rest coming from branches in Belgium, the Netherlands, Germany, Slovakia, and specialist manufacturing operations in the US and Malaysia.

Halesowen-based Wyko was founded by Philip White in 1962 as a small specialist engineering company. Four years later, it opened its first bearings distribution branch, Lye Bearings.

Wyko has since become the UK`s largest supplier of industrial goods and services through a combination of organic growth and a string of acquisitions, including EW Bearings, Oswald Seals, Olympic Chevin, Thamesdown Bearings, Swan Bearing Factors, BERL, the Lewis group, Burton Engineering Supplies, ST Bearings, Central Engineering Supplies, the ESL group, MR Transmissions, Tomax, Express Bearings, GM Fluid Power Centre, John Fenwick, and Lilleshall. In 2002, it bought and merged with Fenner Power Transmissions.

In 1985, Wyko was floated on the Stock Exchange, but in 1999 was delisted and taken back into private ownership through the management buyout.

Wyko`s core business is its Industrial Services (WIS) operation, with 110 sites of its own, and further 103 operations on customers` premises. WIS` sales are currently worth around £218m.

WIS includes Wyko`s Industrial Distribution, Electromechanical Engineering Services, Integrated Solutions, and International operations. Wyko also owns four specialised businesses: the Rencol tolerance ring business (with sales worth £8m); the Revolvo bearings company (£2.5m); Tire Technology, which produces tooling for the tyre industry (£9m); and Pioneer Weston, which manufactures rotary axle seals (£2.5m).