ICS Triplex Buyout Confounds Private Equity Critics

July 15, 2007
Rockwell Automation’s acquires ICS Triplex, a process that started back in August of 2000.

By Andrew Bond, editor of the Industrial Automation Insider and a Control contributing editor

Rockwell Automation’s recent acquisition of ICS Triplex for £110 million concludes a story that began in August 2000. That’s when the Industrial Control Services Group (ICS) was rescued from bankruptcy by Tritrax, which was established for that purpose by venture capitalist Alchemy Partners. Alchemy was involved in an abortive attempt earlier that year to rescue the U.K.’s sole volume car maker, Rover Group, and had acquired a largely undeserved reputation as an asset stripper or, in Jim Pinto’s words at the time, a “bottom-feeding venture capitalist.” This impression was reinforced when Alchemy offered just 1 pence per share for ICS, valuing it at £1.7 million only two years after its market capitalization had stood at in excess of £50 million. Independent shareholders were less than impressed, but eventually came to realize that Alchemy’s 1 pence was about 1 pence more than anyone else was prepared to pay.

Once it gained control, Tritrax/Alchemy partially allayed initial fears by injecting £12.7 million to secure the company’s immediate future. At that point, ICS had three main components, the ICS Triplex safety business and the Transmitton SCADA operation in the U.K. and U.S.-based Max Controls, which was the DCS business of the former Leeds & Northrup. Max Controls was sold to Metso within a couple of months, but Alchemy continued to invest in the other two companies and their people. For example, it hired Emerson Process Management’s then-U.K. managing director, Ian Wright, to head up Transmitton. He made a number of acquisitions, and Transmitton became a leader in SCADA for the rail industry. It was sold to Siemens for an undisclosed sum in 2005.

A similar pattern developed at ICS Triplex, which acquired the ISaGRAF automation software business in 2003 and then bought independent main instrument contractor Silvertech and Singapore-based integrator Semitech in 2005. It also made a technology agreement with ABB, covering the latter’s TMR product business in 2002. Altogether, Alchemy has confounded its critics by extracting three successful high-tech businesses from the ashes of ICS and by returning about 1,000% over seven years on its original investment. It’s hoped that Rockwell’s stewardship will be as successful.

MTL Buys Elpro

Meanwhile, as the last vestiges of one U.K. automation group pass into North American hands, another is pursuing its own bold acquisition policy. MTL’s £12-million “friendly” takeover of Australian wireless solutions developer Elpro International complements its existing portfolio of connectivity solutions.

“MTL is already a leading supplier of components for this communication layer and now, with the addition of Elpro, we can provide interconnect solutions using all major technologies,” says Graeme Philp, MTL’s CEO.

The Elpro deal is the latest in a series of acquisitions and partnerships MTL made in recent years in pursuit of Philp’s aim of making the company the leading global supplier of ‘building blocks’ for automation systems. Back in 2000, it acquired U.S.-based Standard Automation and Control, which became the basis of its MTL Open Systems (MOST) division. In 2001, MTL formed a partnership with Relcom to develop Foundation fieldbus solutions. In 2005, it acquired German operator display specialist GECMA, which provided the nucleus for a new visualization business unit. And last year, MTL formed a bilateral, cooperation agreement with German electro-mechanical interconnect specialist Weidmuller.

In the industrial Ethernet field, MTL has a similar cooperation agreement with Moxa, and in November 2007, it collaborated with Byres Security to launch the Tofino cyber-security product. With the pace increasing remorselessly, the hope must be that MTL doesn’t overextend itself, and that it can avoid the pitfalls which resulted in the downfall of ICS.

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