Alchemists sell ICS/Triplex to Rockwell Automation by Jim Pinto

In Sept. 2000, I chronicled the decline and fall of ICS a UK-based publicly-held industrial automation company that spun out of control. ICS had acquired several ailing companies - Max Controls (part of venerable Leeds & Northrup, which itself was sold off piecemeal to competitor Honeywell), Triplex, Transmitton and others.

With total revenue of about £70M at the time, ICS had a lot of bank-debt and significant losses. As ICS waited and waited for a "white-knight" to save them here's what I wrote in JimPinto.com eNews, July 24, 2000:

"The problem with this type of company is that, although it has some good pieces and management, nobody wants to buy it, because nobody wants the headaches. The only ones willing to buy a pig-in-a-poke are vulture-capitalists who will carve up the carcass and sell it off piecemeal."

As if on cue, ICS was acquired in Sept. 2000 by a UK venture-capital firm called Alchemy, which made a tender offer for the publicly held stock. I chronicled the story in JimPinto.com eNews (complete story, weblink below):

"Tritax, the Alchemy subsidiary that made a low-ball offer for ICS (UK) currently have garnered about 63% of the equity. ICS is a publicly held company, and is expected to be 'de-listed' from the London Stock Exchange on September 13th. Some of the stockholders, who are still withholding their support for what they think is a ridiculous price, suggest that 63% is not enough to enforce a compulsory acquisition and the shareholders can only be forced to sell if Tritax owns 90%. A couple of ICS people considered staging a management buyout, but they were not gutsy enough to make the move and, after some initial noise, were never heard from again. So Tritax and Alchemy bought the whole pig-farm."

The final act in the ICS saga was recently played out with the sale of ICS/Triplex (revenues about £70M) to Rockwell Automation for £110M in cash. Wow! Alchemy certainly converted the ICS pig-in-a-poke into gold in under 7 year. They paid just £1.7m for the whole lot. Then they sold Max Controls to Metso a month after ICS was acquired, and then sold Transmitton to Siemens in 2006. And now this £110M payout. Hats off to the Alchemists!

Now, what does this say about Rockwell Automation? Did they just buy a fattened-up pig? Just a few months ago they bought an Ireland-based Systems Integrator for an exorbitant price. Now another questionable acquisition in England for a price that is admittedly "dilutive to earnings in the first fiscal year". Would you like to bet that the "dilutive earnings" continues? Unless Rockwell changes the game and chops it up - which it undoubtedly will. Hmmmm...

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