Textron to divest fluid business to Clyde Blowers

12 September 2008

The owner of the Cessna brand of corporate jets and Bell helicopters, Textron Inc, will divest its Fluid & Power unit to the UK-based provider of clean energy technologies for coal fired power plants Clyde Blowers Ltd for a deal value of $645 million as it plans to exit the pump and power transmission markets, in favour of what it percieves as more profitable lines.

Textron's fluid & Power unit is part of its industrial sector, which contributed 26 per cent to Textron's sales last year. It hopes to net over $85 million after taxes for the unit that makes pumps, gears and gearboxes for the oil, mining, and construction industries.

The divestiture will be one of the largest since the company sold its fastening systems business to private equity firm Platinum Equity in 2006 for $630 million.

The current divvstiture will fetch Textron approximately $526 million in cash, a six-year note with a face value of $28 million, up to $50 million based on final 2008 operating results primarily payable in a six-year note. In addition Clyde Blowers will assume about $41 million of certain employee-benefit liabilities.

Included in the transaction is the sale of all four of Textron Fluid & Power product lines - gear technologies, hydraulics, Maag Pump Systems, Union Pump and each of their respective brands.

"This is a very positive move for both parties, as well as a great fit for our employees," said Lewis B. Campbell, Textron's chairman, president and CEO. "Clyde Blowers is gaining world-class operations with Textron's Fluid & Power group of companies, including some of the most advanced technologies, respected brands and highly talented people in their respective industries - while we continue to strategically focus our portfolio of businesses to deliver even more meaningful value growth, profitability and shareholder return."