Sheffield Forgemasters Group plans to split its business into two – aerospace and engineering components – prior to flotation, in an attempt to make it more attractive to investors.
`It’s a difficult story to tell as one entity because each business is likely to appeal to different types of investor. So it makes sense to split them,’ said Stuart Wallis, chairman of Sheffield Forgemasters.
If the group goes ahead with the proposal, the smaller, higher-margin business, aerospace, with sales around £50m, could be floated next year as the Engineering Technologies Group. It could be capitalised at up to £60m.
The engineering business with turnover around £100m, would follow later. Wallis said that a trade sale might be considered as an alternative, depending on which gave better vendor value.
Jobs are unlikely to be affected by the demerger, according to the company. Management and some of the 1,800 staff own around one third of the business, and two venture capital outfits, Schroders and NatWest Ventures, own the rest.
The company was bought out by management from British Steel and Johnson Firth Brown in 1988. In the year 1995 to 1996, it made £9.2m pre-tax on sales of £144m. Figures for the year to March 1997 are due soon.
The aerospace arm is a primary steel supplier for Rolls-Royce engines: materials are used for critical components such as shafts, discs, bearings, and gears.
The engineering division produces some of the world’s largest castings – up to 300 tonnes.