Drives and Controls Magazine
$415m Fasco sale completes Invensys` disposals
Published:  01 November, 2002

Invensys has sold the last of its motion engineering businesses, Fasco Motors, to the US-based Tecumseh Products Company for $415m in cash. The sale means that Invensys has generated proceeds of more than £1.8bn from its current disposal programme, exceeding its target of £1.5bn, four months ahead of schedule.

Fasco makes fractional horsepower AC and DC motors, blowers, gearmotors and linear actuators. Its headquarters are in Michigan and it has 13 manufacturing plants around the world, including eight in the US, two in Mexico, and one each in Canada, Thailand and Australia. The company, which is almost a century old, employs around 5,200 people, and in the 12 months to the end of September produced an operating profit of $60m on sales of $467m. The transaction covers net assets worth around $205m, while goodwill previously written off to reserves amounts to around $550m.

Tecumseh, also based in Michigan, makes mechanical and electrical components including pumps, air-conditioning and refrigeration compressors, petrol engines, and powertrain components for lawnmowers and other garden equipment. Its products are sold in more than 200 countries, principally for use by industries creating products for "health, comfort and convenience" Last year, its sales amounted to some $1.4bn.

Tecumseh plans to combine Fasco with some of its existing hermetic motor and electronics operations to form a new electrical components business which will operate independently. The company does not expect any jobs to be lost in the process.

Tecumseh chief executive Todd Herrick - grandson of the company`s founder - sees the Fasco acquisition as "a key step" in revitalising the growth of his company. He says it is "a good strategic fit" with Tecumseh`s mission to design and manufacture products "that improve the human condition".

Dave Kay, Tecumseh`s chief financial officer, adds that the acquisition will deliver increased value to the company`s shareholders and will allow Tecumseh "to deliver higher value-added products and complete customer solutions in all of our business segments".

The sale of Fasco marks the end of Invensys` current round of sell-offs of "non-core assets", designed to cut its debt. Over the past year, it has found buyers for operations including Brook Crompton, CompAir, Eurotherm Drives, Rexnord and Sensor Systems. The programme has reduced its net debt from £3.3bn a year ago, to £1.5bn, on a proforma basis.

"We have surpassed our stated £1.5bn target and we have delivered this vital element of our strategy well ahead of schedule," says chief executive, Rick Haythornthwaite. "The disposals have reduced our debt significantly, removed concerns about our financing, and given us the headroom to implement our strategy.

"The single focus of Invensys will now be on achieving our stated performance targets for the company," he adds.