Platinum Equity has agreed to buy the fastening systems unit from diversified manufacturer Textron for $630 million in cash, plus the assumption of various liabilities.
Based in Troy, Michigan, Textron Fastening Systems produces fastening systems for industrial customers in more than 150 countries and had annual revenue of approximately $1.8 billion in 2005. Texton Inc., which is based in Providence, Rhode Island, had announced in December that it planned to sell the unit as part of an overall effort to trim its non-core manufacturing businesses. The unit represented about 20 percent of overall profits for the company. The sale marks Textron’s complete exit from the fastening business.
Platinum senior vice president Mark Barnhill said the potential for consolidation in this sector made this a competitive sale.
“There was a significant amount of interest from both strategic and financial buyers, but at end of day we emerged as the winner of that process,” he said.
The unit, which Platinum says will get a new name and new brand image, manufactures various types of fastening systems for the aerospace, automotive, construction, electronics, and industrial equipment sectors. The unit is a major supplier of screws and bolts for the automotive industry.
Platinum is a global acquisition firm specialising in the merger, acquisition and operation of companies in a broad range of business markets. Since its founding in 1995 the firm has acquired more than 60 businesses with more than $12 billion in aggregate annual income. This is Platinum’s first entry into the fastening system sector.
“Our approach is to identify and acquire businesses that are often times non-core divestitures from larger corporate parents in market sectors that are undergoing some sort of transformation,” Barnhill said. “We like to go in and acquire a platform company in a new market sector and look for add-on acquisitions.”
Barnhill said the sector is currently estimated to be a $38 billion industry but remains highly fragmented. He added that the fastening system industry is undergoing change as new technology and automated assembly services are reducing in-place costs.