SPX/Radiodetection Acquisitions Drive Value, Position in Pipe Inspection/Rehab

SPX Corporation has strengthened its position in the pipe inspection/rehabilitation market through two acquisitions. Both are complementary additions to its Radiodetection business unit, which has an industry-leading product portfolio of cable and pipe locators, used by utility companies to help install, protect and maintain their infrastructure networks.

Charlotte, N.C.-based SPX supplies highly engineered products and technologies for various markets, including HVAC, detection and measurement, and engineered solutions. In 2017, the company had approximately $1.4 billion in annual revenue and more than 5,000 employees in about 14 countries.

Most recently, SPX entered into a definitive agreement to purchase CUES Inc., merging its parent company, ELXSI Corporation, with the Radiodetection subsidiary within SPX’s Detection & Measurement segment.

ELXSI’s 2017 annual net sales were approximately $90 million. Under the agreement terms, ELXSI stockholders will receive cash consideration equal to $51 per share of common stock outstanding, as of the effective time of the merger, or a total of about $189 million.

CUES, based in Orlando, Fla., manufactures closed-circuit television video (CCTV) inspection, rehabilitation and pipe-profiling equipment; and pipeline inspection/asset management software for sanitary and storm sewers, industrial process lines, and water lines.

“Bringing together CUES’ strong reputation for high-quality pipe inspection equipment and services, with SPX’s global footprint and marketing infrastructure, is a natural step in taking CUES to the next level of growth and performance,” said Sandy Milley, president and CEO of ELXSI.

The transaction is expected to close in Q2 2018 and is subject to regulatory and stockholder approvals and customary closing conditions. Milley will remain with ELXSI and continue to lead the CUES business.
According to Gene Lowe, SPX president and CEO, the purchase will “create a stronger, more competitive inspection solution for customers, with meaningful growth and margin opportunities,” as well as excellent value-creation for investors.

“Along with our recent purchase of Schonstedt Instrument Company,” he added, “we are off to a solid start in our deployment of available capital, while maintaining a strong balance sheet and cash generation profile.”

Based in Kearneysville, W.V., Schonstedt provides solutions for the detection and location of underground utilities and other phenomena buried below the ground or water. It specializes in magnetic instruments to locate iron and steel (ferrous) objects, and pipes and cables (linear underground conductors). The company sells its products through a wide network of dealers and manufacturer representatives throughout the world, and had 2017 annual revenues of approximately $9 million.
spx.com; cuesinc.com, schonstedt.com

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