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ShawCor Acquires Socotherm, Thermotite Brasil

Wednesday, November 10, 2010

Pipeline supplier ShawCor Ltd. is steadily expanding its coatings reach worldwide, staking a claim to Italian pipe-coating contractor Socotherm S.p.A. and swallowing up offshore protective coatings maker Thermotite Brasil Ltda. of Brazil in recent weeks.

The acquisitions are “strategic growth initiatives” for Toronto-based ShawCor and complement a recent resurgence in pipeline project activity that netted the company an increase of more than 20% in third-quarter revenue, said president and CEO Bill Buckley.

Socotherm

With the recent approval of Italian regulators, ShawCor has teamed up with two investment firms to purchase a 95% ownership interest in Socotherm, based in Vicenza, Italy. Socotherm primarily serves the oil and gas industry and had revenues of €137 million (about $188.8 million US) at the end of 2009.

The purchase will be made through a new holding company called Fineglade Limited, in which ShawCor will have a 40% interest. ShawCor will invest about €30 million (about $41.4 million  US) in the deal. The total purchase price was not disclosed.

The deal was announced May 18 and should be completed this week, according to a statement by ShawCor.

Thermotite Brasil, BS Servicios de Injeção

ShawCor also announced that its Bredero Shaw division had acquired the remaining 50% interest in Thermotite Brasil Ltda. and BS Servicios de Injeção that it did not previously own.

The $37.9 million deal will be paid in two installments, with $19.4 million due upon completion of the transaction and $18.5 million to be paid in 2013.

Since 2006, Bredero Shaw has been a partner in this successful joint venture in the offshore thermal insulation market in Brazil, ShawCor said. The venture has a strategically located facility that provides anticorrosion and advanced insulation coatings for offshore applications, ShawCor said.

Bredero Shaw is anticipating increased demand for these products as Brazil invests heavily in offshore oil and gas developments.

ShawCor’s largest division, Bredero Shaw is a worldwide provider of pipe coating solutions and employs about 4,000 people in 15 countries. The division provides specialized coating systems and related services for corrosion protection, insulation and weight coating applications on land and marine pipelines, including corrosion and insulation systems for deepwater applications.

Q3 Results

The two deals helped ShawCor achieve “very strong improvement” in its third-quarter financial results, compared with those of the first half of the year.

Buckley reported increased pipeline project activity in North America and Latin America. Meanwhile, the Asia Pacific region reached full production on the $185 million PNG LNG pipe coating project and the $42 million Epic Energy QSN3 project, he said.

Third-quarter revenue of $283 million increased by 20% over the $235 million reported in the prior quarter. EBITDA increased by 91%, to $58.8 million, from $30.8 million in the second quarter 2010 as operating margins strengthened. Backlog at the end of the third quarter remained strong at $382.2 million but did decline from $421.8 million at the prior quarter end.

ShawCor Ltd. is a global energy services company that operates through seven business units focused on technology-based products and services for the pipeline and pipe services market and the petrochemical and industrial market. The company has manufacturing and service facilities in more than 20 countries.