The new Chinese owners of Tyneside subsea engineering firm SMD say they want to make the North East company world number one in its field.
A party of top executives from CSR Times Electric, a subsidiary of the Chinese state-owned rail manufacturer China South Rail, visited Wallsend to mark the completion of their firm’s £120m acquisition of SMD.
Speaking to The Journal, Ding Rongjun, the president of CSR Times Electric, who also led the takeover deal, said there would be forthcoming investment into SMD in order to fuel expansion, particularly on Chinese home soil.
Mr Rongjun said: “The acquisition of SMD is not the result of impulse, but the dream we have pursued for a long time.
“Around five or six years ago CSR Times Electric started to enter the field of ocean engineering equipment. The acquisition of SMD is a key step in our company’s strategy to develop our business in this area, and in the future the remote operated vehicle industry will provide synergies with CSR’s current activities.”
While Mr Rongjun said there were no immediate plans for further acquisitions, he confirmed that Hong Kong Stock Exchange-listed CSR Times Electric would be pleased to fund any moves deemed necessary by SMD chief executive Andrew Hodgson, who continues to lead the firm.
A group of Chinese executives tasked with integrating SMD into the 90,000-strong transport giant have already visited the Wallsend site, which will now serve as the global headquarters of CSR Times Electric’s deepwater equipment division.
Representatives from the firm’s Hunan Province headquarters said there were plans to bring some of SMD’s UK engineers to China as part of efforts to join the two businesses.
Plans are also afoot to create a Chinese subsidiary of SMD which will develop a presence in the Chinese maritime market.
Mr Rongjun also hinted at potential plans for a Chinese manufacturing facility which would produce technology developed on Tyneside, subject to SMD’s future trading.
SMD’s Andrew Caffyn, who recently stepped down as chairman of the firm but will remain on the newly formed board, welcomed completion of the deal.
He said: “We’re delighted that CSR has become the new owner of SMD and we’re excited about what the future now holds.
“When CSR approached us about an acquisition we could see their track record for developing high growth companies through technology innovation was very attractive.”
Andrew Hodgson, SMD chief executive, thanked former owners Inflexion Private Equity for their part in fuelling the companies growth, and welcomed CSR Times Electric’s “respectful” acquisition along with their understanding of SMD’s needs.
SMD represents the second UK acquisition for the Chinese firm who bought a majority shareholding in Lincolnshire-based Dynex Semiconductor in 2008.
Liu Hualong, the president of CSR Corporation Ltd, said the acquisition of SMD was in line with the Chinese Government’s strategic objectives of growing national capabilities in maritime technology.
The country hopes that by 2020 its share of the global ocean engineering equipment market should reach 35% and its share of the offshore oil and gas equipment market should exceed 50%.
CSR itself has recently merged with China North Rail (CNR) to create a $26bn group, and Mr Hualong said the organisation’s dominance in the rail industry meant it had to look to other industries for growth, hence the acquisition of SMD.