Plexus has made an investment of £735,000 to acquire a 49% interest in KMS, a precision engineering business focused on the oil and gas industry.
The transaction is said to be in line with management’s strategy to position Plexus as an IP-led company based around its POS-GRIP friction grip method of engineering with a design, development and now a machining capability.
KMS was founded in 2001 and manufactures parts used in harsh and demanding subsea environments within the oil and gas industry. KMS supplies a range of blue-chip international clients, including Schlumberger, Halliburton, GE Oil & Gas, NOV and Weatherford.
Post the sale of its niche wellhead exploration equipment services business for jack-up applications to TechnipFMC in February 2018, Plexus is focused on commercialising and exploiting its existing IP as well as developing new POS-GRIP-enabled products either organically or with partners such as TechnipFMC, with whom the company has entered into a collaboration agreement.
It is anticipated that KMS will provide Plexus with additional means by which to machine bespoke equipment for new applications and technologies as well as for R&D testing, and will potentially enable Plexus to more effectively supply specific markets.
Plexus is acquiring its 49% interest in KMS by means of a subscription for new shares in KMS. KMS intends to use the proceeds from the Transaction to expand existing capacity and fund other growth initiatives. For example, KMS has recently acquired a new large bore machine which has already resulted in a significant expansion in capacity. KMS intends to use circa £310,000 of the proceeds arising from Plexus’ investment, in settlement for this piece of machinery. Under the terms of the transaction, Plexus will be entitled to future distributions/dividend payments which would provide an annual return on Plexus’ investment, subject to KMS’ profitability, in addition to any capital appreciation in the value of Plexus’ 49% shareholding in KMS. An additional cash payment of up to £150,000 may be payable by Plexus to the current owners of KMS, subject to the future performance of KMS in the year to 31 December 2018.
Plexus’ CEO Ben Van Bilderbeek said, “As a highly experienced engineering company based in Aberdeenshire with a blue-chip customer base, KMS shares many similarities with Plexus. We already have first rate IP in the form of our POS-GRIP technology, and now thanks to today’s transaction, we are further able to support our programme to expand the application of our proprietary technology throughout the oil and gas supply chain and beyond into areas such as geothermal and decommissioning. Having established our jack-up exploration wellhead business as the dominant supplier to the North Sea HP/HT market, we know the challenges companies operating in the sector face. Therefore, we look forward to working with and supporting the KMS team going forward, as we look to grow our business substantially over the coming years.“