Hicks Equity in $558m specialty metals exit

The Dallas-based firm first invested in Latrobe Specialty Metals in 2006, injecting a combined $41m in the company along with private equity firm The Watermill Group.

Hicks Equity Partners and private equity firm The Watermill Group have sold Latrobe Specialty Metals in a transaction valued at $558 million. The deal is expected to close by 30 September, 2011.

Dallas-based Hicks and Massachusetts-based Watermill acquired Latrobe for a combined $41 million in equity in 2006, sources close to the firm told Private Equity International. The firms are selling the company to Carpenter Technology Corporation, which manufactures stainless steel and specialty alloys.

Hicks Equity Partners is the private equity arm of Hicks Holdings, which manages the family assets of chief executive officer Thomas Hicks, co-founder of the firm formerly called Hicks Muse Tate & Furst, with which Hicks is no longer affiliated.

As part of the Latrobe sale, Hicks and Watermill will receive a combined 8.1 million Carpenter shares valued at $388 million. Carpenter will also pay an additional $170 million to eliminate Latrobe’s debt and cover any transaction costs.

In addition to the shares and debt payments, Thomas Hicks and Watermill co-founder Steve Karol will join Carpenter’s board of directors.

Pennsylvania-based Latrobe produces specialty materials for the aerospace, defense and energy sectors. Its annual revenues and EBITDA through March, 2011 were $379 million and $58 million respectively.

Latrobe filed for a $175 million initial public offering in May, but that process has been canceled by the sale, sources close to the deal said.