AMR supports Rexnord with its acquisition of Precision Gear Holdings

High oil and gas drilling activity and a shift to more complex environments spurs demand

The deal

Rexnord, a global process and motion control engineering company, acquired Precision Gear Holdings (Precision Gear and Merit Gear), a build-to-print manufacturer of complex gearing and specialized gearboxes primarily for the oil & gas and mining process industries and aerospace

Key insights: Demand (oil and gas)

  • Growth in unconventional and deepwater drilling is driving investment in high-specification oil and gas drilling rigs and equipment
  • This is supporting the need for precision-machined motion drive and control components such as gears and gearboxes. Jack-up rigs, now capable of drilling in deeper water and requiring complex gearing and gearboxes, is one example. High spec, AC powered top drives, drawworks and mud-pumps are other application example
  • The longer term outlook for high spec rig equipment is positive as US gas exportation will support drilling and a number of rig operators need to further invest in their fleets in order to remain competitive

Key insights: Supply

  • Build-to-print machining and fabrication service businesses drive profit through a number of operating models; some focus on one or two major OEMs in one or multiple end markets; some focus on the end user channel; some of the most profitable performers focus on “emergency