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Michelin buys Fenner for £1.3bn to boost its high-tech activities

20 March, 2018

The French tyres to maps giant, Michelin, is buying Fenner, the UK-headquartered conveyor belt and reinforced polymer products manufacturer, in a deal that values Fenner at £1.3bn. Michelin sees the acquisition as being “in perfect strategic alignment” with its ambition to enhance its expertise in high-technology materials.

The boards of both companies have reached an agreement on the terms of a recommended cash acquisition by Michelin. Fenner PLC shareholders will receive 610 pence in cash for each share – a 30.7% premium to Fenner’s share price of 467 pence at the close of business on 16 March 2018.

The addition of Fenner’s polymer portfolio will help Michelin break into the reinforced polymers markets, in the consumer goods, industrial devices and medical segments. Michelin is developing its expertise in advanced materials and engineered products and it sees Fenner as being the cornerstone of this process.

The acquisition will also allow Michelin to provide its mining industry customers with a comprehensive offering, from tyres to conveyor belts., as well as related services. It will also enhance both companies’ geographic reach.

“Mastering high-technology materials is key to creating value in the coming years,” says Michelin CEO, Jean-Dominique Senard. “Fenner will enable Michelin to accelerate its growth in this area, and to strengthen its position as a key player in the recovering mining markets with a comprehensive offering.”

Fenner CEO, Mark Abrahams adds: “We find the cultural fit and business opportunities excellent with Michelin. Both companies have innovation in their DNA and are customer-solution oriented.”

Fenner, which generated revenues worth £655m in 2017, has two divisions:

•  Engineered Conveyor Solutions (ECS), the world’s second-largest producer of heavy conveyor belts, and a global player in the heavy and complex conveyor belt market. In 2017, it was responsible for 55% of Fenner’s revenues.

Fenner's product portfolio includes belts for power transmission and motion control

•  Advanced Engineered Products (AEP), a leading player in polymer-engineered products for niche markets around the world. Its portfolio includes belts for power transmission and motion control.

Fenner recently acquired the US-based manufacturer of custom-engineered polymer and metal bearings, National Bearings Company.

Although headquartered in Hessle in the UK, only 21% of Fenner’s sales are in the EMEA region. Its biggest regional market is the Americas, accounting for 47% of its sales, followed by Asia-Pacific on 32%. It has manufacturing sites in locations including the US, Australia, China, Singapore, Germany, Norway, South Africa, India, the Netherlands, and Hull in the UK.

Michelin has identified significant opportunities to achieve material cost savings, with £30m of immediate annual synergies.

Fenner was founded in Hull in 1861 by Joseph Henry Fenner. Its early products were leather belting for use in power transmission, lacing and hoses.

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