ENGINEERING and manufacturing group Tanfield has doubled in size after taking over Smith's Electric Vehicles (SEV) in a share and cash deal worth £3.2m.

The County Durham-based company said the acquisition of SEV would continue the transformation of the former engineering group, as it moves into higher value manufacturing and technical assembly markets.

Tanfield paid £2.2m and a further £1m in new ordinary shares for SEV, which employs 110 people at its Team Valley factory.

Tanfield said the takeover effectively doubled the size of the group, which last week announced an increase in turnover to more than £5m.

SEV designs and manufactures electric vehicles, powered aerial access systems and materials handling equipment and has an annual turnover of more than £10m.

The company was established in 1920.

Tanfield Group chief executive Roy Stanley welcomed the deal, which he said represented a positive step forward for the AIM-listed company.

Mr Stanley, a former employee of SEV, said: "I know the business well. Tanfield has been a major supplier to SEV for a number of years. It is consistent with our strategy of moving up the value chain in order to enhance margins.

"The acquisition brings with it a number of opportunities. In particular, we believe that zero and low emission delivery vehicles, access platforms and people carriers have significant growth potential given their cost and environmental benefits."

In its interim results announced last week, Tanfield reported a growing order book and an increase in the workforce from 160 to 230, despite pre-tax losses of £2.5m.

Tanfield Group was formed in January after a takeover by the digital imaging company comeleon.

Since then, it has undertaken significant changes to its business, moving from short-term sub-contract engineering work, to specialist technical assembly solutions on longer-term contracts with blue-chip firms.

Recent contract wins include supplying assemblies to the defence industry.

Chief executive Roy Stanley said: "The acquisition provides further evidence of the successful reshaping of our business, taking it into new market areas which will provide a solid base for further growth."