ESAB expands through acquisitions in Brazil and Russia

ESAB has acquired 60 per cent of the shareholding of Condor Equipamentos Industriais Ltda and will assume full managerial control. Based in Contagem in the state of Minas Gerais in Brazil, Condor is a leading manufacturer of equipment for gas welding and cutting. In its financial year ending 31 December 2010, Condor had revenue of R$22.5 million (£8.3 million). On that date Condor had gross assets of R$20.8 million (£8.1 million) and employed around 180 people. 

Condor manufactures regulators, torches, nozzles and flashback arresters mainly for handheld welding, cutting and heating applications, though some products are used on automated cutting machines. In the last few years Condor has invested heavily in product development and a new factory, and is now establishing a reputation as a supplier of high-quality products. Condor sells directly to major end users and through a network of distributors within Brazil. 

ESAB already has its own distribution network in Brazil and covers areas where Condor is currently under-represented. ESAB therefore intends to sell primarily Condor-branded gas products in Brazil while retaining the ESAB brand elsewhere in South America. Industries into which the Condor products are sold include shipbuilding and repair, offshore oil and gas rigs, and the construction sector. 

Having completed the acquisition, ESAB is now incorporating Condor within its global strategy for gas welding, cutting and heating to maximise opportunities and efficiencies, especially in rapidly expanding markets such as Brazil, Russia, India and China. In recent years ESAB has become a leading player in the South American welding market; in 2010 the company achieved sales worth £242.3 million in this region, which represents 21 per cent of ESAB's total revenue and makes South America the second most important market after Europe. 

According to Brendan Colgan, CEO of ESAB: "This acquisition is in line with our strategy of growing ESAB's presence in emerging markets, which are already responsible for around one-half of the company's revenues. We believe that South America provides one of the major growth opportunities in the worldwide welding market over the coming years and that Condor, as a market-leading gas apparatus manufacturer in Brazil, will contribute to ESAB's continued growth in the region." 

Another expanding market for welding is Russia. Earlier in 2011, ESAB acquired LLC Sychevsky Electrodny Zavod, a leading manufacturer of welding electrodes based in the Smolensk region. Sychevsky's electrodes are premium products used in the oil and gas, energy and bridge building sectors, sold through a network of distributors. The acquisition increases significantly ESAB's share of the important market for welding electrodes, as well as providing additional manufacturing capacity. 

In its financial year ending 31 December 2010, Sychevsky had revenue of RUR421 million (£9.0 million). On that date Sychevsky had gross assets of RUR250 million (£5.3 million) and employed around 300 people. 

ESAB has grown organically in recent years to become a leading player in Russia and the CIS (Commonwealth of Independent States). In 2010, ESAB's sales in Russia exceeded US$100 million for the first time, representing some six per cent of ESAB's total revenue. A key factor behind the growth in revenue has been the significant expansion of the distributor network, which now totals over 200. ESAB's and Sychevsky's combined customer bases and product ranges are expected to create further opportunities for ESAB to increase its presence in Russia.