Wärtsilä acquires John Crane-Lips to consolidate its position as the leading global ship power supplier

Wartsila Corporation, Stock exchange release 30 January 2002 at 02:01 UTC+2

Wärtsilä Corporation STOCK EXCHANGE RELEASE 30 Jan. 2002

John Crane-Lips, a leading global supplier of marine propulsion systems, will become part of Wärtsilä following the signing of the sale and purchase agreement between Wärtsilä and John Crane-Lips´ UK-based parent Smiths Group. The transaction enhances Wärtsilä’s position as the leading global ship power supplier and provider of integrated propulsion systems. The acquisition price is GBP 215 million (approx. EUR 350 million).

John Crane-Lips reported net sales of GBP 152,4 million (EUR 249,4 million) and operating profit of GBP 18,7 million (EUR 30,6 million) in the financial year ending 31 July 2001. Their net assets are GBP 52 million (EUR 85.1 million). The company has 1,200 employees.

The acquisition of John Crane-Lips, which will operate within Wärtsilä under the name Wärtsilä Propulsion, marks an important step towards our strategic goal to lead the ship power market. The acquisition will be earnings neutral and cash flow positive in the first year, stated Wärtsilä’s President and CEO Ole Johansson.

To improve their competitiveness and efficiency shipbuilders are choosing to outsource complete marine power systems on a turnkey basis. Wärtsilä provides the shipowners and shipbuilders with a single point of contact throughout the life-cycle of the installation from design and delivery through to maintenance, said Mikael Mäkinen, Group Vice President, Wärtsilä Marine Division.

Wärtsilä has had a successful alliance with John Crane-Lips since October 2000. Our customers are increasingly demanding integrated solutions and this acquisition is a logical step towards consolidating our position as the world-leading supplier of integrated ship power systems, says Mäkinen.

Wärtsilä and John Crane-Lips have significant complementary strengths: Wärtsilä has a comprehensive portfolio of marine engines whilst John Crane-Lips has a complete range of marine propulsion products.

John Crane-Lips is a supplier of propulsors, marine seals, bearings and integrated propulsion systems. The company has five operational centres of excellence: Drunen, Netherlands; Havant, UK; Toyama, Japan; Rubbestadneset, Norway and Chesapeake, USA; and five manufacturing sites in Europe and Japan. The centres of excellence support the global sales and service network.

Wärtsilä will gain the brand name Lips, the best known of the John Crane-Lips portfolio, as well as the valuable Deep Sea Seals brand. Smiths Group will retain the name John Crane.

The acquired business with its 1,200 employees will be part of Wärtsilä Marine Division; it adds EUR 235 million to the net sales of the division. Net sales of Wärtsilä´s Marine Division for the financial year ending 31 December 2000 were EUR 719.7 million.
The goodwill will be in the range of EUR 275 million and will be amortised over 20 years.

Completion of the purchase is subject to regulatory approvals, which are expected for the early part of this year.

About Wärtsilä Corporation
Wärtsilä is the leading global ship power supplier and a major provider of decentralised power generation systems and supporting services.

Wärtsilä´s net sales in 2000 were EUR 2.7 billion with 10,500 employees in more than 50 countries.

About Smiths Group
Smiths Group is a global business with market leading positions in aerospace systems, sealing solutions, medical devices and interconnect products. Smiths Group’s net sales totalled GBP 3.5 billion for the financial year ending 31 July 2001 employing 37,000 staff.

For further information, please call:
Mr Mikael Mäkinen, Group Vice President, Marine Division, Wärtsilä Corporation Tel. +358 10 709 5620 or
Ms Sari Grönbärj, IR manager, Wärtsilä Corporation. Tel +358-10 7095 216.