Duke Street realises its investment in Deloro Stellite with sale to Kennametal Inc

Date: 17/01/2012

Duke Street has agreed to sell its investment in Deloro Stellite, the specialist engineering group, to Kennametal Inc of the US. The transaction, which is subject to customary regulatory approvals, is expected to be completed in Q1 this year.

Deloro Stellite is one of the world’s leading producers of alloy-based critical wear solutions for extreme environments involving high temperature, corrosion and abrasion. Its products and services are used by the power generation, oil and gas, automotive and aerospace industries. The company, employs approximately 1,300 people globally and operates from 7 primary facilities in the US, Canada, Germany, Italy, India and China. Group revenues in 2011 were approximately €250m.

Deloro Stellite has been owned by Duke Street since April 2006, when it was acquired for €175m. This sale to Kennametal follows last month’s disposal of Deloro’s non-core medical division, ATS Sferic to Marle International, a French medical products business. The total proceeds from the two sales are around €330m. Kennametal Inc, listed on the New York Stock Exchange, is a US headquartered international business with revenues of US$2.4bn in 2011 and around 12,000 employees in 60 countries. The Group is one of the world’s largest manufacturers of cutting tools, having originally created a tungsten-titanium carbide alloy that provided a productivity breakthrough in the machining of steels.

Commenting on the sale, Andy Caffyn, Group CEO of Deloro Stellite said:

"We are very proud of what we have achieved at Deloro under Duke Street’s ownership. We now have a business with leading edge technologies, efficient manufacturing and skilled people committed to providing engineered solutions to meet our customers demanding wear problems. The business is well positioned for further growth and it is no surprise we are attractive to a world class company like Kennametal. Our two businesses are very complementary and as such I firmly believe Kennametal will be a great long term owner of our business. Together we can offer a broader range of products, technologies and support to better serve our customers globally."

Duke Street Partner Charlie Troup added:

"Deloro is a different business today compared to the one we acquired in 2006. We, at Duke Street, are delighted to have played our part along with management in adding significant operational value to the business during our ownership. Today, the business has clearer strategic focus, better operational performance, and an excellent management team. Thanks to significant investment in production facilities and technologies, Deloro now enjoys strong long term relationships with world class customers. We wish the combined company continuing success in the coming years."

Duke Street was advised on the sale of Deloro Stellite by Lazard & Co., Limited and law firm SJ Berwin.