One of the region’s most dynamic firms is to expand with the acquisition of a Tyneside-based subsidiary of Rolls Royce.
Newcastle’s British Engines will buy Michell Bearings, a marine company based in the city’s west end for around £12.6m, making it the group’s seventh engineering company in the North East.
The firm is also set to acquire the Rolls-Royce Training School as part of the deal, which is expected to be completed this autumn, once British Engines receive various licence consents which will enable the business to run under different ownership.
Michell Bearings, which designs and manufacturers hydrodynamic bearings for a wide range of marine and industrial applications, also owns a 51% shareholding in Michell Bearings (India) Pvt Ltd, a non-wholly owned subsidiary company based in Bangalore.
British Engines’ chief operating officer Richard Dodd said the buyout, which involves more than 200 employees, will allow it diversify its product portfolio.
Mr Dodd said: “We are delighted to welcome Michell Bearings to the group. This is an exciting opportunity for us to further diversify our portfolio and invest in a company that has a strong brand and product range.
“Michell Bearings’ products complement British Engines’ existing products and fit well with the group’s focus on value added engineering. We are looking forward to working with the business to provide the investment in people and resources required for future growth.
“British Engines has a firm commitment to the development and retention of talented and ambitious people in the North East, which is seen through its award winning Apprenticeship+ scheme.
“As a result of this commitment British Engines wants to see Rolls-Royce’s established training school continue to flourish in the North East.”
British Engines currently employs around 1,000 people across six businesses in the North East which design and manufacture technology leading products for industries including oil and gas, chemical, marine, construction and agriculture sectors.
Its existing businesses are BEL Valves, CMP Products, Rotary Power, Stephenson Gobin, Stadium Packing and BEL Engineering. The acquisition of Michell Bearings and the Rolls-Royce Training School will add another 230 to the workforce.
The company has also recently announced its intention to build a world-leading centre of excellence for hyperbaric testing on the north bank of the River Tyne in partnership with Newcastle University.
Mikael Makinen, Rolls-Royce, President – Marine, said: “The agreement will allow Rolls-Royce to concentrate on the core areas of our Marine business where we can add most value.
“It will also present Michell Bearings with fresh opportunities by aligning the business with British Engines, which has a long history in the North East of England.
“We will offer full support to employees who are impacted by the change and we wish British Engines and its employees all the very best with the future development of the Michell Bearings business.”
Michell Bearings reported gross assets of £13.3m (before minority interests) as at 31 December 2014 and generated consolidated profits (before minority interests) of £5.9m in the year to 31 December 2014.