Hargreaves acquire niche engineering outfit

Apr 4 2008 by Karen Dent, The Journal

ENERGY, waste and minerals company Hargreaves Services has acquired a niche engineering maintenance business in a £4.64m deal, it was announced yesterday.

County Durham-based Hargreaves, which recently announced a 59% hike in profits to £6.6m for the first half of its financial year, is paying £2.2m on completion of the deal for AJS Contracts. This will be followed by two payments of £1.22m each made on the first and second anniversaries of the acquisition.

AJS, based in Cresswell near Chesterfield, Derbyshire, and staffed by 50 former miners, is a great bolt-on for Hargreaves’ business Norec, according to the group’s chief executive Gordon Banham.

Although Norec operates equipment at power stations, it did not have the capability to repair that machinery when there were problems and it was forced to call in the services of other companies. It had previously worked with AJS in this capacity.

Mr Banham said: "We had outsourced work to AJS before and it also worked with two big EDF power stations – Cottam and West Burton – that we did not work with, as well as other customers like British Sugar."

AJS, which provides services including fabrication works and repairs, in addition to providing skilled engineering labour to power stations, is forecasting annual profits of around £1m on sales of £6m during its current financial year.

The founder of the business approached Hargreaves as a potential suitor when he was considering retirement because "he wanted the business to go to a good home", said Mr Banham.

He added that a couple of extra administration posts were expected to be created at AIM-listed Hargreaves’ Esh Winning headquarters as a result of the acquisition.