BTR Siebe plc
BTR Siebe plc
London SW1P 1BX
(44) 171 834-3848
Fax: (44) 171 834-3879
Web site: http://www.btrsiebe.com
Incorporated: 1819 as Siebe plc
Sales: $6.13 billion (1998)
Stock Exchanges: OTC
Ticker Symbol: BSBE
SICs: 8711 Engineering Services
Already the worldwide leader in the design, manufacture, distribution, and installation of controls and control systems, Britain’s Siebe Plc. is positioned to become a diversified manufacturing giant as it merges with the British manufacturing conglomerate BTR pic. in 1999. While analysts have questioned the wisdom of Siebe’s move from a relatively “pure play” controls and controls systems group to a diversified engineering and manufacturing empire, there is no doubt that the emerging BTR Siebe will become one of the world’s leading manufacturing concerns, with industry dominance in the high value added controls and automation industries. The merger, at a price of approximately £6 billion, represents only the latest in a long span of acquisitions that have enabled Siebe to grow from a company producing revenues of just £370 million in the mid-1980s to a giant with annual sales of nearly £3.7 billion in 1997. The BTR merger was expected to more than double Siebe’s annual sales.
The proposed portrait of the post-merger BTR Siebe suggests more of an acquisition than a partnership, as Siebe’s management, including key figures CEO Allen Yurko and Chairman Lord Colin Marshall, will retain the top positions. Nonetheless, BTR, which has been struggling through much of the 1990s, will provide several of its own top figures, including its CEO Ian Strachan, who will serve as the merged group’s deputy chairman, and Kathleen O’Dono van, who will continue her previous position as the new group’s chief financial officer. After the merger, Siebe shareholders will retain 55 percent of the company’s shares.
Siebe’s product line numbers more than 10,000 individual products produced by more than 150 subsidiaries around the world and includes such well-known brand names as Foxboro, Robertshaw, APV, Univam, ACL-Drayton, Eberle, and many others. Siebe manufactures controls and control systems ranging from components for small appliances to sophisticated turnkey control automation systems for such projects as nuclear power stations and offshore drilling platforms. In addition to its manufacturing, Siebe also produces the software to drive its control systems under various computer platforms.
BTR, which has its own history of rapid expansion through acquisition, will add its diversified range of products, centered around four primary areas: process controls; specialized engineering systems; power drives for gear boxes and motors; and drive train and other systems for the automotive industry. At the same time, the company is expected to continue the process of shedding BTR’s more diversified interests, which included subsidiary companies in the packaging, laminates, building products, sporting goods, and office furniture industries, among others.
Siebe’s Change of Strategy in the 1970s
Siebe’s beginnings stemmed from the arrival of former Austrian cavalry officer Augustus Siebe in London in 1819. A natural inventor, Siebe would be credited with a number of innovative products, ranging from water pump and rifle components designs to the product that would come to define Siebe for much of the 20th century—the world’s first diving suit. The success of the Siebe diving suit led the company to focus on this new market, and from the 1890s the company developed into a specialized marine engineering company with an emphasis on safety and rescue systems. As such, Siebe became a supplier to the British Royal Navy, among others, developing breathing apparatus and submarine emergency escape equipment. As the world took to the skies in the early part of the 20th century, Siebe adapted its underwater breathing apparatus to use in high-altitude conditions. By then, Siebe’s designs had gone underground, as the company developed safety and rescue equipment for mining operations. Among noteworthy Siebe products were its Proto and Salvus rescue suits—the Proto name eventually would become synonymous with rescue stations in Britain’s mining community.
Siebe remained a small, barely profitable manufacturing company. Until well into the 1960s the company’s revenues hovered below the £1.5 million mark; the company’s overhead, including an extended payroll, left little of its revenues as profits. By then, however, the company had acquired new management, in the person of Barrie Stephens, formerly with General Dynamics and later granted the royal title “Sir.” Taking the managing director’s position at Siebe in 1963, Stephens would spend the 1960s restructuring Siebe’s operations, trimming staff by more than half, and expanding the company into new directions. At the end of the 1960s Stephens would lead Siebe into the first of what would become a long string of acquisitions. By the end of the decade, while bringing the company’s revenues past the £2 million mark, these moves also had quintupled Siebe’s profits. Siebe’s business, which remained primarily British-based, would double to reach £4 million by 1972.
In the 1970s Stephens would start the process of transforming Siebe from a small domestic safety products company to a global group targeting the broader engineering controls category. Stephens’s taste for acquisition had only just been whetted. In 1972 the company made its first significant acquisition, the purchase of leading safety product specialist James North & Sons. This company, larger than Siebe itself, was the leading European manufacturer of safety products and systems and gave Siebe its first strong foothold on the European continent. The James North acquisition also would mark another company trait: rather than place the Siebe name on North’s operations, Siebe continued to market its new subsidiary’s products under the North brand name. The same pattern would recur with Siebe’s new acquisitions, to the extent that the Siebe name would remain relatively unknown, even though its brands led their respective markets.
The North purchase gave a new impulse to Siebe’s revenue growth. By year end 1973 Siebe’s sales had topped £18 million, before reaching the £20 million mark the following year. Steady and continued growth followed throughout the 1970s, despite the international recession caused by the Arab Oil Embargo. By the end of the decade Siebe had topped £50 million in sales.
Controls Specialist in the 1990s
Siebe continued to build its U.K. and European business, while eyeing entry into a new market: that of North America. The company would find a portal in 1982 with the acquisition of Tecalemit, one of the leading garage equipment and automotive tubing suppliers. This addition would help raise Siebe’s sales to more than £156 million by 1984. The Tecalemit purchase also would lead the company into a new direction. Included in the Tecalemit acquisition were two subsidiaries producing electronic controls systems. These did not, however, fit together with Siebe’s other businesses, and the company searched for a buyer for the two subsidiaries. The search was not successful, as a long slump in the computer and electronics industries had weakened the marketplace. Nonetheless, the controls subsidiaries remained profitable operations.
The Tecalemit controls subsidiaries also would provide essential pieces of the Siebe puzzle. With the company undergoing rapid growth and strong profits, Stephens’s war chest provided opportunities for still larger acquisitions. The next Siebe acquisition came in 1985, with the purchase of compressed air systems and equipment specialist CompAir. That acquisition proved doubly interesting: in addition to providing Siebe with a complement to its North American garage equipment and safety equipment markets, CompAir brought with it three subsidiaries specialized in hydraulic controls systems. The new controls category fit neatly with the Tecalemit controls subsidiaries, and a new Siebe division was born.
By the end of the decade the child had grown larger than the parent. The new subsidiaries had given Siebe a solid footing in the North American market. But they also would encourage the company to invest more heavily in what was still a fairly young industry. The long-predicted reliance on computers and computers systems was becoming more and more of a reality in the 1980s, particularly with the widespread adoption of numeric control manufacturing systems and processes and the increasing use of automation and robotics in manufacturing.
In just five years Siebe would build a worldwide presence in the controls industry. The company’s revenues would soar past £1.2 billion. Although the company continued its safety equipment and other manufacturing activities, controls would become its core focus. Three important acquisitions brought Siebe to this point. The first, made in 1986, added the United States’ Robertshaw to the growing Siebe portfolio of subsidiaries. One of the leading controls manufacturers in the North American market, Robertshaw added its specialty category—appliances—to Siebe’s list.
BTR and Siebe have merged to create a world class engineering group with global leadership in the high-value-added controls and automation industry.
Siebe quickly reinforced its entry into appliance controls with the acquisitions of two more U.S. companies, Raneo and Barber-Colman, in 1987. These acquisitions also gave Siebe entry into industrial and commercial building control systems as well as into automotive control systems. In the appliance control segment, meanwhile, Siebe had achieved a worldwide leadership position. Raneo also added more than 75 years of experience in the heating and air conditioning temperature control segment, as well as control systems for commercial and home refrigeration. The Raneo and Barber-Colman acquisitions pushed Siebe’s turnover past the £1 billion mark in 1988.
Siebe leader Stephens, who had raised the company’s revenues more than 1,000 times in less than 30 years, began moving toward retirement in the 1990s. At the start of the decade, Stephens named the American Allen Yurko as the group’s managing director and COO. During the years to follow Stephens would transfer the company’s day-to-day leadership to Yurko, who was name CEO in 1994.
In the meantime, Siebe had gained global leadership of the controls industry. A significant acquisition came in 1990, with the purchase of the Foxboro Company, a world leading process controls automation company based in Foxboro, Massachusetts that had fallen on hard times in the 1980s. At a price of approximately US $650 million, Siebe added Foxboro’s more than US $500 million in sales of its Unix-based control automation and other control systems products. Foxboro’s specialty—that of implementation of large-scale control systems for oil refineries, chemical and pharmaceutical plants, nuclear and other power generation plants, and control systems adapted to the pulp and paper industries—placed Siebe firmly at the forefront of the world’s control process industry. After restructuring Foxboro’s operations, including trimming an oversized management and a vast private security staff, Siebe returned its new subsidiary to profitability by 1992.
Between 1992 and 1998 Siebe would conclude an impressive number of acquisitions, ranging from the 1993 purchase of Germany’s Eberle, to the 1996 acquisition of Unitech plc, the company’s largest acquisition to that date. Unitech brought the company its electronic power controls, while adding significant reinforcement to Siebe’s Asian Pacific sales, which continued to lag behind its U.S. and Europe sales. Other acquisitions during this period include those of Eckardt AG and Schmidt Armaturen, both of Germany, Sweden’s NAF Group, Triconex Corporation, Appliance Control Technology Inc., Eliwell SpA, LeROI International, Fabex Inc., and Satchwell Control Systems, the U.K. leader in the building automation segment. The 1997 purchase of APV Pic. marked Siebe’s second bid for that leading food, beverage, dairy, and pharmaceutical process automation control specialist (the first takeover attempt having been fought and lost by Siebe in the mid-1980s).
Siebe’s acquisition activity enabled the company to maintain its revenue and profit growth in the face of the difficult economic climate of the first half of the 1990s. By its year end 1996, the company neared £2.6 billion in revenues. The company, which, despite its worldwide dominance of the control systems market, remained in large part unknown to the public, nonetheless became known for its so-called “black belts,” a staff of some 300 managers sent into newly acquired subsidiaries to assist in the restructuring and integration in the Siebe group.
Sir Barrie Stephens retired in 1998, passing on full leadership of Siebe to Allen Yurko in that year. The company’s chairmanship was delegated to Lord Colin Marshall. Yurko would lead Siebe on its most aggressive acquisition year ever, one that would catch industry observers by surprise. Throughout 1998 the company made a number of acquisitions, including that of manufacturing process execution software designer Wonderware, which would be merged with the company’s existing Foxboro operations. The company also added Electronic Measurement, a maker of power supply controls, and Eurotherm, which specialized in temperature controls. To accommodate these acquisitions, Siebe engaged on a restructuring drive, eliminating a number of jobs, a process that would continue through the end of the year and prepare the way for Siebe’s largest-ever acquisition.
In November 1998 Siebe announced that it had agreed to merge with British manufacturing conglomerate BTR to form BTR Siebe. The deal, which was expected to be finalized in February 1999, would add BTR’s £4.8 billion annual sales to Siebe’s £3.9 billion and create one of the United Kingdom’s largest manufacturing groups. The deal also left Siebe basically in control of the merged entity, with Yurko remaining in place at the new manufacturing giant’s helm.
The addition of BTR gave Siebe not only that company’s process controls divisions, specialized in valves, meters, and batteries, but also its specialized engineering activities, principally in airplane repair, filtration and railroad signaling systems, and in automotive and power drive manufacturing. Although Siebe was criticized for abandoning its “pure play” status to take on a new role as a diversified manufacturing conglomerate, the BTR acquisition nonetheless presented a number of opportunities for synergy, while adding to Siebe’s own manufacturing lines. Meanwhile, Siebe’s long experience in integrating and restructuring subsidiaries, while sustaining its own steady growth, made the BTR acquisition seem less of a risk.
The Foxboro Company (U.S.); BTR Nylex Ltd. (Australia); Hawker-Siddeley Group Ltd.; Stowe Woodward; CompAir (U.S.); Eaton Technologies (U.S.); Mesnel (France); Metzeler Automotive Profiles (Germany); Perfiles (Spain); Weavexx (U.S.); Westinghouse Brake & Signal (U.K. and Australia).
Aerospace and Sensors; Appliance Controls; Automotovie Systems; Climate Controls; Environmental Controls; Industrial Equipment; Instrument & Valve; Intelligent Automation; Pneumatics; Power Controls; Specialist Equipment.
Edgecliff-Johnson, Andrew, “Time for Siebe to Weave Its Magic at BTR,” Financial Times, November 25, 1998.
Holmes, David, “Siebe Merger Debate Hots Up,” Reuters Finance UK, November 27, 1998.
“Siebe Company History,” London: Siebe plc, 1998.
“Siebe’s Driving Force Takes a Tighter Grip on the Controls,” Financial Times, November 24, 1998.
—M. L. Cohen