Global Fastener News

2006 FIN -PennEngineering Tops ‘Strong Pace’ of 2005 Fastener Acquisitions

April 17
00:00 2014

May 24, 2006 FIN – The $300 million acquisition of PennEngineering topped the list of fastener acquisition as 2005 yielded “a strong pace” of deals, Richard Hagan found in compiling his ninth annual “Top Ten Fastener Acquisitions of the Year.”

“Deal activity in the worldwide fastener industry continued at a strong pace during 2005, comparable to the level of activity witnessed during 2004,” reflected Hagan, president of NY-based Pinnacle Capital Corp., which specializes in fastener acquisitions.
PennEngineering was acquired by Tinicum Partners II L.P. for $302 million.
Runners up were the $193.3 million acquisition of Air Industries Corp. by Precision Castparts Corp.; the $98.8 million acquisition of Infast Group plc by Anixter International Inc.; and the $92.1 million purchase of Knipping Verbindungstecknik GmbH by LISI.
Hagan found 2005 fastener acquisitions were fueled largely by “private equity firms which are flush with cash,” such as Tinicum Partners’ PennEngineering deal and Trinity Hunt Partners in its purchase of Lone Star Fasteners.
In addition, “several large industry players expanded their product range, customer base and/or market coverage by acquiring strategic targets,” Hagan observed. Among the strategic add-ons were Precision Castparts’ purchase of Air Industries, LISI’s acquisitions of Knipping and UMECO’s purchase of Provest.
There were new industry participants as “companies with operations complementary to fasteners entered the fastener business via acquisition,” Hagan added. He cited the purchase of Endries International by Ferguson Enterprises and the Home Depot acquisition of Crown Bolt and Brampton Fastener as examples.
Hagan noted that in addition to the Top Ten deals “there was a high volume of smaller transactions involving both manufacturers and distributors of fasteners, such as two divestitures completed by Pinnacle Capital; the sale of Stillwater Fasteners of E.Freetown, MA to Triem Industries LLC for Vertex Distribution and the sale of BAS Aerospace of England to UFC Aerospace Corp. for TT Electronics plc.
“Based on the number of transactions completed so far this year and the deals currently ‘in progress,’ it appears that 2006 will be another banner year for mergers and acquisitions in the worldwide fastener industry,” Hagan forecasted. “Significant deals already completed this year include the purchase of Shur-Lok Corp. and Shur-Lok International Inc.; Belgium by Precision Castparts Corp. for $110 million and the acquisition of Singapore-based TPA Pte. Ltd. by Denmark-based Satair S/A for $32 million.”
“Significant deals currently underway, but not yet completed, include the sale of Textron Fastening Systems – the world’s second largest fastener company with annual net sales of $1.8 billion – by Textron Inc.; the sale of Lake Erie Products by TriMas Corporation; and the purchased of Aviall Inc. by The Boeing Company.

By Richard P. Hagan, Pinnacle Capital Corp.
(Arranged in chronological order)
In March Precision Castparts Corporation acquired Air Industries Corporation for $193.3 million in cash.
Garden Grove, CA-based Air Industries manufactures airframe fasteners, structural bolts, pins and screws from titanium and nickel-based alloys.
Founded in 1951, Air Industries was privately owned and had $60 million in net sales and 510 employees.
Included in the purchase were Air Industries California real estate assets and the business assets of header tooling and punch die manufacturer Air Tuf Products Inc. of Phoenix. Air Industries became part of PCCs Fastener Products segment (formerly SPS Technologies) and Air Tuf is now part of PCCs Precision Tool segment.

2) Tinicum Capital Partners II L.P. acquired PennEngineering & Manufacturing Corp. in May for $302 million. The purchase price was comprised of $330.6 million in cash paid for PennEngineering shares at $18.25 per share (the company had cash and cash equivalents of $28.6 million).
Founded in 1942, Danboro, PA-based PennEngineering manufactures proprietary fasteners at five U.S. plants and one each in Ireland and Italy, and has 1,360 employees. PennEngineerings 2004 net sales totaled $242.5 million with an EBITDA of $38.1 million and EBIT of $27.6 million.
Members of the former senior management team of SPS Technologies Inc. assumed management of Penn-Engineering.

3) In its initial entry into the fastener industry, Home Depot Inc. acquired Crown Bolt Inc. and Brampton Fastener Co. Ltd. (Brafasco) in separate transactions for undisclosed purchase prices.
Founded in 1981, Aliso Viejo, CA-based Crown Bolt was a privately owned supplier of fasteners and consumer hardware to retail hardware stores from four U.S. distribution warehouses.
Home Depot was Crowns largest customer.
Brampton, Ontario-based Brafasco was founded in 1966 and was one of Canada’s leading suppliers of fasteners and industrial supplies to manufacturing and construction markets. Privately owned Brafasco operates 22 stocking branches in Canada and three in the U.S.
Crown Bolt and Brafasco became part of Home Depot Supply the division supplying residential / commercial construction and MRO.

4) In July LISI – Link Solutions for Industry – acquired Knipping Verbindungstechnik GmbH for 75.5 million (US$92.1 million) in cash.
Founded in 1939, Kierspe, Germany-based Knipping was a privately owned manufacturer of externally threaded fasteners and stamped components for European automotive and industrial markets.
Knipping has 600 employees at four plants in Germany, one in Spain and sales offices in the UK and France.
Knipping reported 2004 net sales of 97.7 million (US$124.6 m) and EBIT of 9 million (US$11.5 m).
Belfort, France-headquartered LISI manufactures automotive and aerospace fasteners and reported sales of 600 million (US$765.2m).

5) Anixter International Inc. acquired Infast Group plc in July for £54 million (US$98.8m). The price included £39.5 million (US$74.1m) cash for Infast shares and £14.5 million (US$27.2m) of assumed debt.
Gloucester, England-based Infast distributes fasteners and C class components to OEMs from 25 UK distributions centers and six in the U.S. Infast has 900 employees and reported 2004 net sales of £157.1 million (US$294.7m) and EBIT of £3.1 million (US$5.8m).
Infast became part of Anixters OEM supply segment, which is comprised of acquired fastener distributors Pentacon (2002), Walters Hexagon (2003) and Distribution Dynamics (2004). Anixter is expected to cut costs by reducing Infast’s overhead and consolidating service centers.

6) In July Park-Ohio Holdings Corp. acquired Purchased Parts Group Inc. through its Integrated Logistics Solutions (ILS) business unit for $7.5 million, including $7 million cash and an ST seller note of $500,000.
Memphis-based PPG distributes fasteners and C class components to industrial and automotive customers. PPG was privately owned and operated 12 service centers in the U.S., UK and Mexico.
PPG reported 2004 net sales of $74 million and 260 employees.

7) Ferguson Enterprises Inc. acquired Endries International Inc. in September for an undisclosed purchase price.
Brillion, WI-based Endries distributes fasteners and C class components to OEMs from 70 service centers and in-plant stores in 30 U.S. states and smaller operations in Canada, UK and the Netherlands.
Founded in 1970, Endries was privately owned with 500 employees.
For the fiscal year ended July 31, 2005, Endries reported net sales of $149.5 million and gross assets of $57.7 million.
Endries became part of Fergusons Commercial/Industrial Business Group, but continues to trade under the Endries name and is managed by Steve Endries.
Ferguson distributes plumbing supplies and pipes, valves and fittings and is a subsidiary of Wolseley plc.

8) Trifast plc completed the acquisition of Serco Ryan Ltd. in October for £18 million (US$32 million), including £16 million (US$30m) cash and £2 million (US$3.8m) of Trifast stock.
Serco Ryan had been a wholly owned subsidiary of UK-based MRO distributor Wyko Holdings Ltd.
Serco Ryan, headquartered in Kidderminster near Birmingham, England, is a stocking distributor of fastener and industrial consumables to OEMs. Fasteners represent 70% of sales.
Serco Ryan operates eight UK service centers with 200 people and reported £41.3 million (US$77.5m) and EBIT of £2.3 million (US$4.3m) for the fiscal year ending April 30, 2005.
Trifast expects to consolidate branches, reduce total inventory and increase use of its Far East manufacturing base.

9) UMECO plc acquired Italian distributor Provest Srl for £13.8 million (US$24.2m) in October. The deal included £9.3 million (US$17.5m) cash plus up to £4.5 million (US$8.4m) paid to Provest shareholders over three years based on financial performance.
Located near Milan, Provest distributes aerospace fasteners and related hardware primarily to OEMs. AgustaWestland is the largest customer. Provest reported 2004 net sales of £10.6 million (US$19.9m) and EBIT of £1.9 million (US$3.6m). With Provests end of 2004 gross assets of £8.8 million (US$16.5m), the cash payment at closing was 4.8 times trailing EBIT.
If Provest achieves a comparable average annual EBIT over the three years following transaction closing the earn-out payments will yield a 7.3 times EBIT total purchase price.

10) During December, Trinity Hunt Partners LP, acquired Lone Star Fasteners LP for $33.5 million.
Spring, TX-based Lone Star manufactures standard and specialty fasteners and gaskets for extreme temperature, high pressure and corrosive environments.
Lone Star has three business units: Lone Star Fasteners, Walker Bolt / Ameritech and Lone Star Sealing Technologies.
Lone Star reported 2005 net sales totaled $35 million for a 50% increase since it was acquired in early 2004 from T-3 Energy Services Inc. by a six-member investment group led by CEO Bruce Ross. The group had purchased Lone Star for $7.7 million and thus realized a $25.8 million gain over the 22 months the group held Lone Star. Dallas-based Trinity Hunt Partners is a private equity firm specializing in middle-market leveraged acquisitions. The Lamar Hunt family is a major investor in Trinity Hunt Partners.   ©2006/2014 Fastener Industry News.
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com
Editor’s Note: Richard Hagan can be contacted at Pinnacle Capital Corporation. E-mail: rphagan@comcast.net

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