Hicks Holdings, Watermill in $250m steel deal(2)

Dallas, Texas-based Hicks Holdings, the family investment vehicle of Thomas Hicks, and Lexington, Massachusetts-based The Watermill Group, have teamed up to buy Latrobe, Pennsylvania-based Latrobe Specialty Steel Company from its parent company, The Timken Company, for $250 million (€189 million), Hicks, Watermill and Latrobe said in a statement.

The transaction value includes the $215 million purchase price and $35 million in assumed liabilities. The equity component of the transaction is $31 million, with Hicks Holdings contributing $16 million and Watermill committing $15 million. Hicks Holdings will have 51 percent ownership of the equity, and Watermill will have the balance.

Latrobe’s management will remain in place following the completion of the transaction, the statement said. Hans Sack will maintain his position as the company’s president.

Latrobe, founded in 1913 and formerly known as Timken Latrobe Steel when it was acquired by Timken in 1975, consists of two operating divisions: Latrobe Manufacturing and Latrobe Distribution. The manufacturing side “produces more than 300 grads of specialty steel over a range of product families, including high-speed steel, structural alloys, bearing steel, high-temperature steel, corrosion-resistant steel and tool and die steels, which are used in many exacting applications in the aerospace, energy and other industries,” the statement said. The distribution side supplies the steel products to consumers and to other distributors, the statement said, adding, “Latrobes bearings, fasteners and other products have been used in applications as wide-ranging as medical prostheses and the Lunar Rover on the moon.”

Watermill, which invests in middle market companies, has acquired companies in similar industries.  According to the firm’s website, its portfolio includes Customized Structures Inc., a producer of modular homes and commercial structures based in Claremont, New Hampshire, Preferred Rubber Compounding Corporation, a manufacturer of rubber compounds based in Barberton, Ohio, and Vertex Fasteners, a distributor of industrial fasteners based in Pawtucket, Rhode Island.

The investment in Latrobe is Hicks Holdings’ first in the steel industry. Thomas Hicks began investing with his own family fortune under Hicks Holdings in January of 2005 following his retirement from the firm he co-founded, Hicks Muse Tate & Furst (now HM Capital Partners). Last week, Hicks Holdings joined Bahrain-based Investcorp to buy a part of Greatwide Logistics Services, a third-party transportation and logistics company based in Dallas, Texas, from New York and Los Angeles based Fenway Partners for $730 million.