Madison Dearborn exits Schrader for $1bn

The Chicago-based private equity firm will sell the sensor maker after just two years  

Chicago-based Madison Dearborn Partners is selling Schrader International, a global tire sensor maker to Sensata Technologies for $1 billion. The transaction is subject to regulatory approval and is expected to close during the fourth quarter of 2014.

Madison Dearborn was unavailable for comment on the transaction at press time.

Sources familiar with the transaction say that the investment came from Madison Dearborn Partners' sixth fund which closed on $4.1 billion in 2010.

Madison Dearborn bought Schrader International in 2012 from Tomkins, a company co-owned by Onex Corporation and the Canada Pension Plan Investment Board, for $505 million in cash plus a small minority equity interest in the parent of the purchasing company.

Schrader is headquartered in Denver, Colorado and has sales and engineering offices in the United States, the United Kingdom, Germany, China, Japan and South Korea. The company pioneered tire pressure monitoring sensors (TPMS) for automakers. The feature is now standard on all cars in North America. Schrader is expected to generate $550 million in revenue this year.

Sensata Technologies Holding NV, a former Texas Instruments subsidiary, is based in the Netherlands. It makes sensing, electrical protection, control and power management products. The company said on a conference call this morning that although Schrader isn’t a competitor, the acquisition will allow Sensata to expand its international reach.

“The purchase price represents less than a 10x multiple on estimated 2015 stand-alone EBITDA,” said Paul Vasington, Sensata Technologies Chief Financial Officer in a statement. “While we expect Schrader to be $0.13 to $0.16 dilutive to adjusted earnings per share in 2014, we expect Schrader to be $0.18 to $0.21 accretive in 2015, provide $0.50 to $0.55 of accretion after integration and debt pay-down and provide an additional $0.18 to $0.22 accretion when China ramps adoption of TPMS.”