Concentric to Restructure Argentina Operation.
20 July 2015 - Swedish pump manufacturer Concentric AB (STO: COIC) has launched restructuring plan for its new facility in Chivilcoy, Argentina in line with the weak demand in the South American commercial vehicle market, the company said.
Concentric closed the acquisition of GKN Sinter Metals de Argentina SA earlier this year and, as a result, it gained an important foothold in the Mercosur trade union, thereby enabling further penetration of the South American commercial vehicle market.
This redundancy programme is a direct response to the weak demand in the South American commercial vehicle market. This programme will help bring Concentric Chivilcoy's margins in line with the rest of the group.
The programme anticipates a headcount reduction of 34 employees that were engaged at the date of acquisition. Part of the headcount reduction has already been delivered and the remaining will be delivered in July 2015 through a mix of voluntary and compulsory redundancies.
The redundancy programme will result in annual savings estimated at SEK 9m.
The total one-off expenses recognised for the restructuring plan in Concentric Chivilcoy amount to SEK 14m and have been booked in 2Q15.
As noted in in the group's 1Q15 interim report, Concentric has recognised SEK 15m of income arising from negative goodwill as the fair value of the net assets acquired with GKN Pumps exceeded the purchase price.
Historically, GKN Pumps has been an unprofitable venture and, as a result, the seller approached Concentric intent upon a strategic exit from the pump manufacturing business.
This, together with the apparent over manning in the Chivilcoy facility at the date of acquisition, enabled Concentric to agree a favourable purchase price.
Concentric AB is the former Hydraulics Division of Haldex AB and from June 16 2011 a separate listed company.
The company's global manufacturing presence includes factories in Sweden, Germany, the UK, the USA, Argentina, India and China.
Target: Facility in Chivilcoy, Argentina
Vendor: Concentric AB
Deal size in USD:
Buyer advisor: , ,
Comment: Will book SEK 14m charge for 2Q15