Realising value for a US subsidiary company

Background

US-based manufacturer Avon Engineered Fabrications (AEF) makes hovercraft skirts and bulk liquid storage tanks, mainly for the American military. As a result of Avon Rubber plc’s own acquisition strategy, AEF was set to lose the benefits it enjoyed under the US Small Business Regime. It was therefore deemed non-core to Avon Protection division’s long-term strategy, and Avon wanted to realise the value in the company while enabling it to move forward independently.

Action

FRP’s Corporate Finance team were appointed to work with AEF and assess the options for the business. The team’s work in assessing AEF led to preparing it for sale, identifying a pool of potential buyers, and running a sales process to maximise the value for Avon Rubber.

Outcome

The business was sold to US-based Performance Inflatables, part of American investment group Pinewell Capital, for $9.25 million. This not only realised a value considerably in excess of historic offers for the business, but also secured a home for AEF that will enable it to continue prospering into the future.

“We are delighted to have concluded a transaction that recognises the value of AEF for Avon Rubber while enabling AEF to continue to thrive under new ownership. The outcome is a great result for Avon, and FRP has been instrumental in making it happen. The FRP team drove the deal to completion, allowing senior management to continue to focus on running the core business, knowing the process was in good hands.” Nick Keveth, CFO of Avon Rubber