Zhuzhou CSR Times Electric Co has bought United Kingdom-based subsea equipment manufacturer, Specialist Machine Developments Ltd, for about 130 million pounds ($191.6 million).
The subsidiary of China’s CSR Corp completed the acquisition of the entire share capital of SMD on April 15.
SMD will remain independent in its business operations, and day-to-day running will still be controlled by its original management team.
But CSR will add an executive and at least one financial staff member to the team. Chairman of the board will be appointed by Zhuzhou CSR Times, according to the sales and purchase deal signed in February.
“Both rail transportation and subsea equipment are strategic high-end industries encouraged by the government. A combination of the technical strengths of CSR and SMD will be win-win for both companies,” said Ding Rongjun, chairman of Zhuzhou CSR Times on Wednesday.
SMD has a number of business streams, including remotely operated vehicles, subsea trenching, submerged mining and marine renewables.
The company’s product portfolio includes the world’s largest range of ROVs. SMD also has marine renewable energy devices, subsea installation technologies and submerged mining equipment.
“Becoming part of CSR will be a key step in SMD’s development as a business and we look forward to continuing to deliver to our markets in this new and exciting phase of our history,” Andrew Hodgson, chief executive officer of SMD, said in a press release.
The UK company has about 320 staff, including an engineering team of 150 employees. For Zhuzhou CSR Times, SMD is its second UK acquisition after snapping up a 75 percent share in Dynex Semiconductor Ltd in 2008.
“This is a good timing for making purchases, given the lowest sterling/euro exchange rates,” said Li Donglin, general manager of Zhuzhou CSR Times.
SMD will establish a subsidiary and a manufacturing base in China. The company’s equipment will be used in ocean engineering, nuclear and tidal power generation. SMD aims to become one of the world’s leading suppliers of subsea vehicle systems within five years.
“It sounds like a totally different industry from transportation equipment, but it’s also about machinery, electronic control and material, actually very similar to our industry,” said Liu.
Marine equipment manufacturing is one of the Chinese government’s strategic industries, but experts said that R&D capability of the sector remains weak.
Even so, the sector is growing. ROV operational expenditure will be about $9.7 billion from 2013 to 2017, an increase of nearly 80 percent compared to the previous five years, according to UK energy consultancy Douglas-Westwood
“The ‘Belt and Road Initiative’ will bring new business opportunities to Chinese equipment suppliers. CSR will not only be a leading manufacturer for ground transportation, but will be involved in the subsea engineering equipment market,” said Liu Hualong, president of CSR.
The “Belt and Road Initiative”, namely, the Silk Road Economic Belt and the 21st Century Maritime Silk Road, were put forward by President Xi Jinping in 2013.