Sparrows Offshore and American Aero generate Energy

UK service company Sparrows Offshore Services has merged with US marine crane builders and contractors American Aero Crane and Titan Industries to form Energy Crane International.

Titan was already a subsidiary of American Aero and all three cranes were controlled by venture capitalists London Merchant Securities (LMS).

Management control will be led by Sparrows Offshore, the larger partner. Ken Scott, the chief executive of Sparrows Offshore, has now become chief executive officer of Energy Cranes International, which has a group turnover of $100m.

'This is a merger between complementary businesses who each lead in their own sector of the market,' said Scott.

Sparrows Offshore Services, with a $70m turnover and 670 employees, describes itself as 'the world market leader in offshore crane management services for the energy industry'. Sparrows seeks to take turnkey responsibility for the whole life of its clients' cranage from installation, through operation and maintenance planning supporting enhanced safety, to ultimate decommissioning. Its headquarters are in Aberdeen, Scotland and it has operations in Nigeria, Angola, Abu Dhabi, Dubai, the Caspian, Brazil, Jakarta and Perth (Australia). Since it acquired US company Martec in 2002, it also has a presence in Houston.

American Aero Cranes and Titan Industries claim to be the largest and longest established manufacturers of marine pedestal cranes in the USA. They produce box boom and lattice boom models up to 150 US ton capacity and have some 2,200 cranes installed worldwide across the US Gulf, southeast Asia and India. Annual turnover is about $30m and there are 170 employees.

'Each brand - Sparrows, American Aero and Titan - commands high customer esteem in its own market,' said Scott. 'Each will bring its strengths to the new business, and each brand name will continue as the group's flagship in its traditional markets.'

Jim Hicks, president of American Aero, will continue to head up manufacturing in the USA also joins the operational board of Energy Cranes International.

'This is a merger in pursuit of growth, not economies,' said Hicks. 'There will be opportunities for all employees to continue in the new business - many in enhanced roles with increased responsibilities and prospects for career development.'

Energy Cranes International in fact was used by LMS back in March 2003 when it took majority ownership of Sparrows Offshore. The management team (which had led an earlier management buyout in 2000) retained a minority share. LMS and Sparrows Offshore's management bought the company's share capital for £26m ($42m).

In June 2003 LMS -- already the majority shareholder in the holding company of American Aero Cranes and Titan Industries - acquired the remaining shares and cancelled the company's listing on the London Alternative Investment Market. This was to pave the way for the integration of American Aero/Titan and Sparrows Offshore Services.

The rationale for the merger is to allow American Aero to bring the lifting services management experience of Sparrows Offshore to bear in developing maintenance strategies now sought by crane owners in the Gulf. It also gives American Aero crane owners outside the US Gulf region access to the much more extensive OEM-endorsed back-up offered by the Sparrows network which will now support American Aero and Titan products internationally. Sparrows' service operation is also expected to develop sales opportunities for new cranes.

The only overlap between the businesses is in Houston, where Sparrows Martec and American Aero's crane service operations compete. The companies said that in due course these operations would also be merged on one site, although no job losses are anticipated.

Robert Rayne, chief executive of majority shareholder LMS, said: 'There is a natural synergy between these businesses which made merger an obvious way forward. I have full confidence that the management team will take the combined business on to new levels of success.'