Skellmax buys Gulf Rubber units in Australia and New Zealand

By Liz White, ERJ staff

Auckland, New Zealand-Skellmax Industries Ltd is expanding again. The New Zealand pump, footwear and dairy rubber group is spending NZ$32 million (Euro 18 million) to buy the Australian and New Zealand businesses of Gulf Rubber, in a transaction which will take effect 1 Feb 2006.

Sydney-based Gulf Rubber designs and makes "highly technical rubber and associated polymer products," said a Skellmax statement. Key markets for its products include automotive, appliance, medical, construction, mining, valve control and irrigation industries, with some 20 percent of sales coming from exports to Asia, Europe and North America, added Skellmax.

Most of Gulf's products are made in Asia under contract, with sales and research & development, and some limited manufacturing, in Australia and New Zealand, said the purchaser.

This latest addition complements Skellmax's existing businesses, and ties in well with the strategy-expanding its international presence and maximising the benefits of production in Asia-said Skellmax managing director Donald Stewart, in the company's statement.

"Gulf provides Skellmax with access to new markets in the medical, appliance and specialist niche automotive sectors," Stewart added. The purchase also adds new multinational customers for Skellmax, with its export business, he pointed out.

Following the acquisition, Gulf will continue to operate as a stand-alone entity, with its existing management and skill base, Stewart said.

"Gulf's technically advanced research and development team provides Skellmax with access to expertise in high-spec and extremely fine tolerance rubber production techniques, including rubber bonding to metal and plastic," he commented. Skellmax can capitalise on this expertise in both its existing business and by expanding its range, he added. Gulf, in turn, will be able to take advantage of Skellmax's established marketing bases in Europe and North America, the Skellmax chief continued.

Skellmax will make an initial cash payment of NZ$21 million, and issue SKX shares to the value of NZ$5 million, together with a cash payment of NZ$6 million, deferred for twelve months.

Gulf has shown growth in earnings (EBITDA) in recent years. For fiscal 2006, revenue for the group is predicted to be NZ$35 million, with EBITDA of NZ$5.6 million.

In November last year, Skellmax spent NZ$20 million to buy four firms in New Zealand, Australia and the UK. The firms bought were:roller-covering companies Thorndon Rubber Co. Ltd in Wellington, NZ and Rubber Services Ltd in Auckland, NZ; plumbing products supplier Jenco Products Pty Ltd of Melbourne, Australia; and UK-based Ambic Equipment Ltd, a moulder of polymer-based equipment involved in dairy hygiene.