Sulzer to sell coatings unit Metco to Oerlikon for $942 mn

Swiss industrial pump maker Sulzer AG yesterday struck a deal to sell its coatings unit Metco, the world's largest maker of thermal spray coatings, to OC Oerlikon AG for around 850 million Swiss francs ($942 million) in cash.

Sulzer CEO Klaus Stahlmann said, ''We are pleased that we have found a new owner for the Sulzer Metco division that will leverage the strengths of the business in the best possible way.''

Winterthur, Switzerland-based Sulzer had in July said that it may sell Metco in order to focus on its oil and gas, power and water business.

Apart from Oerlikon, British Bodycote, buyout group EQT,  US-based Praxair and Japanese IHI Corp, are reported to have also bid for Metco.

Metco makes thermal spray coatings used in  power generation, aviation, automotive, and other industrial markets.  It is a leading surface solutions provider with a global presence.

The business achieves about half of its sales in the transportation markets and about one-third in general industries.

It has become the world's largest maker of thermal spray coatings  after having made around 40 acquisitions since 1985.

Metco, which has around 2 400 employees and sales of almost CHF 700 million in 2012,  contributes about 20 per cent of Sulzer's annual revenue of $4.4 billion.

Post sale, almost 80 per cent of Sulzer's sales will be in the three key markets oil and gas, power, and water.

Sulzer intends to use the funds generated from the divestment for targeted acquisitions and further investments toward organic growth in these key markets.

Pfäffikon based-Oerlikon said it would merge Metco with its coating business, giving it a global presence with around 130 facilities employing around 6,000 people.

The deal will increase Oerlikon's revenue of CHF3.6 billion, nearly a quarter more than its current sales.

"This step marks an important milestone for the Oerlikon Group, creating the technologically leading global product and service company for Surface Solutions," said Oerlikon CEO, Brice Koch.