European private equity firm Candover is to pay E123m ($136m) to acquire Wellstream, manufacturer of flexible pipe applications for the offshore deepwater oil and gas sector based in the UK and US.
Candover is acquiring the business from US oil and gas services group Halliburton, which is selling the business as plans to divest of non-strategic assets.
Candover will invest E70m of its own capital, with senior debt and mezzanine finance worth E71m being arranged and underwritten by Bank of Scotland Corporate Banking. The incoming management team will take an equity stake in the business.
The sale includes manufacturing plants in the UK and US as well as certain assets and contracts in Brazil. Wellstream employs 616 people.
Candover is backing a team led by former Wellstream chief executive, Gordon Chapman, who was CEO of the company between 1990 and 1998. He is joined by Steve Davey, business development director, and finance director Andrew Turk. John Kennedy, formerly an executive vice president of Halliburton, becomes non-executive chairman.
“We are backing a strong management team, with an established track record in the oil and gas sector,” said Candover investment manager, Nils Stoesser. “Given the growing market, we believe that Wellstream's strong product portfolio and independent status will strengthen its market position and allow the company to develop into a world class business.”
Founded in 1983, Wellstream is a leading global manufacturer of flexible pipe systems and solutions, a key component for the offshore oil and gas sector. Major customers include Petrobras, Norsk Hydro, ExxonMobil, Shell and BP.
The deal is Candover’s third transaction of the year, following the recent purchase of Gala, which was acquired from CSFB Private Equity for E1.9bn in February. In January, the firm completed the E625m acquisition of hygiene products manufacturer Ontex.