A British engineering group, Hadleigh Plc, has emerged as the front runner to buy CPV in Co Monaghan from Powerscreen, for a figure in the region of £7 million.
Powerscreen is currently under investigation by the Serious Fraud Office in Britain over alleged irregularities in Matbro, a group subsidiary. It culminated in Powerscreen having to declare that it would now return a pre-tax loss of £65 million, instead of a £10 million profit for the year to March last.
Coincidentally, Hadleigh Plc, a container manufacturer based in Clones, was the victim of fraud in one of its own subsidiaries. Following publication of its annual results earlier this year, an internal investigation by the board uncovered a fraud in the smaller of its two operating subsidiaries, Cookson and Zinn.
Publicly-quoted Hadleigh made a statement to the London Stock Exchange about the affair last month. It said that the fraud had included theft of cash from the subsidiary over a number of years and falsification of the 1997 and prior years' accounts.
As a result, the group, which is based in Ipswich, had overstated its profits by £300,000 over proceeding years. The company said it had no material effects on its accounts and will be treated as an exceptional item of up to £300,000 in the half year results to September 30th.
Hadleigh manufactures storage tanks and transport trailers. It makes industrial storage tanks and tank containers and builds commercial vehicle trailers. It sells its equipment internationally and has a market capitalisation of £15.3 million sterling.
CPV manufactures stainless steel vessels for the chemical and liquid food transport industries and employs around 200 people. It is seen as a growth area as increasing number of countries have to apply more stringent standards in the transportation of chemicals. Hadleigh's interest in CPV has come as a surprise to some industry sources. Hadleigh said last month that it was committed to expanding its presence in South East Asia as business was growing. "We remain confident that the region will provide the greatest opportunities for growth in the medium to longer term which compounds our disappointment that maturing negotiations for a local manufacturing facility joint venture have been put on hold," its chairman said.
One source said it was feared that the company might wind down the Clones facility, but use the name, which is a strong brand image. A spokesman for Powerscreen was unable to confirm or deny the talks between the parties. Hadleigh was unable to contact its senior executives.
Based on the size of the acquisition for Hadleigh, it would appear that the British company would have to seek sanction from its shareholders for the deal to go ahead.
The disposal of CPV is in line with Powerscreen's decision to dispose of non-core assets. It hopes to raise £50 million sterling and concentrate on its screening and crushing divisions. Powerscreen recently sold Geith International, a subsidiary, to its management for £8 million.
