Dallas-based Brazos Private Equity Partners has agreed to take over publicly held metal fabrication supplier Morton Industrial Group through a roughly $100 million (€83 million) recapitalisation.
Morton makes and distributes products such as metal fabrications and assemblies to original equipment manufacturers, and counts corporations such as Caterpillar Inc., Deere & Co. and Kubota Corp. as among its customer base. The company, based in Illinois, has roughly 1,450 employees and operates five manufacturing facilities located in the Midwestern and Southeastern US.
Morton last reported annual net sales of $185.5 million for 2004, with net earnings of roughly $12.7 million. The company’s two largest customers, Caterpillar and Deere, together accounted for just about half of Morton’s total US unit sales that year.
Brazos has agreed to pay Morton shareholders $10 for each outstanding share of common stock, representing a 64 percent premium over Morton’s per-share closing price at the end of trading yesterday. The agreement values Morton’s total equity at around $60 million, and gives the company an enterprise value of around $100 million. According to an 8K filing, National City Bank is providing senior debt financing in connection to the deal, while Massachusetts Mutual Life Insurance has lined up a subordinated debt tranche.
Morton’s management, headed by chairman and chief executive William Morton, is investing alongside Brazos in the deal.
The sale is expected to close in the second quarter. Brazos negotiated a $2.6 million termination fee as part of the agreement, according to SEC documents.
Edgeview Partners advised the sellers on the deal, while Houlihan Lokey Howard & Zukin served as an advisor to the company’s board.