Global Fastener News

Top 10 Deals of 2001

Richard Hagan

Hagan: Recession Slows Fastener M&A�s
The economic recession in the U.S. and much of the rest of the world slowed fastener company acquisitions in 2001, Richard Hagan announced in releasing his annual Top 10 Deals of the Year.
There were only about 20 fastener company transactions in 2001, down from an average of 30 per year in the five years Hagan has been compiling the list.
In previous years there were separate Top 10 lists for manufacturers and distributors. �Due to a significant drop-off in deal activity, the two lists have been consolidated for 2001,� Hagan explained.
The recession also showed in the type of acquisitions, Hagan, president of New York-based Pinnacle Capital Corporation, observed. �The vast majority of the fastener transactions which were completed last year were either �distress sales� or �outstanding strategic fit� situations, where the post-transaction benefits to be derived from the transaction � for both buyer and seller � were extremely compelling.
Hagan, who has specialized in merger and acquisition advisory services to the worldwide fastener industry since 1993, said he hasn�t seen �such a broad-based �lack of confidence� and general �withdrawal from the deal market� by strategic buyers of fastener companies as was the case last year.�
�This situation has not significantly changed so far in 2002 and the signals are certainly mixed as to what the future will bring with regard to deal activity in the fastener industry,� Hagan added.
The Top 10 Deals of 2001
(Arranged in chronological order)
1. During January 2001 Alcoa Corporation purchased Midwest Fastener Corporation, a privately owned manufacturer of nonproprietary screws and bolts for the North American automotive industry. Midwest operates three plants in South Holland, IL, and Valparaiso, IN. Midwest has annual sales of $55 million and employs 295 people. Midwest products are used primarily for automobile body and frame applications and in a variety of final auto assemblies. Following the acquisition Midwest became part of Alcoa�s Huck Fasteners business unit. Terms of this transaction were not disclosed.

2. On January 29, 2001, Infast Group plc purchased Fabricated Components Inc. for $10.25 million in cash. Alpharetta, GA-based Fab-Com is a value-added distributor of fasteners and related assembly components for the appliance, furniture, office products, lighting, telecommunication, transportation, mechanical engineering and electronics industries. Fab-Com is a privately owned company with $11 million in annual sales and 27 employees. Following the acquisition Infast�s U.S. Savannah, GA-based operations were merged into the operations of Fab-Com. Fab-Com is Infast�s first North American fastener acquisition.

3. PennEngineering acquired its first European manufacturing company, Precision Steel Holdings Ltd. for $17.4 million in cash in February. Precision Steel, located in Galway, Ireland, operates through its wholly owned subsidiary, Precision Steel Components, which manufactures screw machine components for the European market and has been a subcontractor to PennEngineering for many years. Precision Steel generates annual net sales of approximately �24 million (US$39 million). Following the acquisition Precision�s name was changed to PEM Fastening Systems/Europe.

4. Lawson Products Inc. purchased the North American operations of the Industrial Products Division of Premier Farnell plc for $36.4 million in cash. Premier Industrial USA is a stocking distributor of fasteners and MRO products for the industrial and automotive markets and is headquartered in Cleveland, OH. It is comprised of six business units: Premier Fastener, Kent Automotive, Rotanium Products, CT Engineering, Certanium Alloys and J.I. Holcomb. Premier Industrial USA has $69 million in annual sales and 400 employees. Detailed terms of the transaction were not disclosed.

5. Black & Decker Corporation purchased the Automotive Division of Bamal Corporation for $34.0 million in cash on April 30, 2001. Bamal Automotive is a value-added distributor of fasteners and related assembly components exclusively supplying the North American automotive industry. Bamal Automotive, a privately owned company located in Farmington Hills, MI, is one of the largest and most sophisticated providers of automotive platform management and logistical services. The division became part of Black & Decker�s Emhart Fastening Systems business unit. The purchase of Bamal continues the trend by automotive fastener manufacturers of acquiring, or partnering with, value-added fastener distributors to expand customer service. Detailed terms of the transaction were not disclosed.

6. Trifast plc purchased Special Fasteners Engineering Co. Ltd. for �15.26 million (US$21.7 million) in cash, with �12.4 million (US$17.7 million) paid at the May 22, 2001, closing and the balance to be paid over three years. SFE, located in Kaohsiung, Taiwan, manufactures self-tapping screws, machine screws, chipboard screws, drywall screws and a broad range of other screws that are sold to a diverse range of customers located in Asia, North America and Europe. Special Fasteners operates three manufacturing plants in Kaohsiung that are QS9000 quality approved. SFE, a privately owned company, has annual sales of US$17 million and 105 employees. SFE has been a supplier to Trifast for many years and will be further developed as the purchasing/stocking hub for Trifast in Asia. Leon Huang, the founder and president of SFE, will continue managing for Trifast.

7. Industrial Growth Partners L.P. purchased Breeze Industrial Products Corporation for $46.2 million in cash on July 10, 2001. Breeze was a wholly owned subsidiary of Trans-Technology Corporation. Included in the sale was the Pebra hose clamp manufacturing operation of TransTechnology located in Germany. Breeze manufactures a comprehensive line of worm-drive, T-bolt and V-band hose clamps for heavy equipment, truck & bus, automotive, industrial, aerospace, and marine applications. Breeze and Pebra have annual sales of $45 million and operate manufacturing plants at its Saltsburg, PA, headquarters and in Frittlingen, Germany. IGP is a $150 million private equity firm that specializes in management buyouts (MBOs) of middle-market manufacturing companies. Breeze president Robert Tunno continues to manage the company.

8. B/E Aerospace Inc. purchased M&M Aerospace Hardware Inc. (�M&M�) for $200.0 million on September 14, 2001. The price consisted of $152 million in cash and $25 million of B/E common stock paid at closing, plus up to an additional $23 million of B/E common stock if M&M meets earnings targets for calendar year 2001. M&M, a privately owned company headquartered in Miami, is an independent aftermarket distributor of aerospace fasteners. M&M maintains four U.S. sales offices and one in each of Canada, France, Germany and England. M&M has $100 million in annual sales, 300 employees and more than 175,000 sq. ft. of aerospace fastener inventory. B/E manufactures cabin interior products for commercial passenger aircraft and business jets with annual net sales of approximately $670 million and was not in the fastener business prior to the acquisition of M&M.

9. Kohlberg & Company LLC purchased TransTechnology Engineered Components LLC for $96.0 million in cash. TTEC was a wholly owned subsidiary of TransTechnology Corporation. TTEC manufacturers the Tinnerman� and Palnut� fastener product lines, which include self-locking & self-retaining speed nuts, nut & bolt retainers, clamps, retaining clips, stud receivers, plastic nuts & inserts, retaining rings and auto headlight adjusters. TTEC has $120 million in annual sales and operates manufacturing plants at the Brunswick, OH, headquarters, and in Hamilton, Ontario, and Massillon, OH, and Mountainside, NJ. Kohlberg is a MBO firm with four private equity funds and $1.4 billion of committed equity capital. Stan Erman, the president and CEO, will continue to manage TTEC. Following the acquisition TTEC was renamed Tinnerman Palnut Engineered Products LLC. Detailed terms of the transaction were not disclosed.

10. In mid-December 2001 Industrial Holdings Inc. completed the sale of its Engineered Products Group for $19.2 million in cash. EPG is comprised of four separate wholly owned subsidiaries that manufacture rivets, rivet-setting machinery and a variety of assembly components – including cold-headed, stamped, fourslide-formed and wire-formed parts. The sale of EPG was completed via three separate transactions. First, OF Acquisition L.P. (d/b/a Orbitform), located in Jackson, MI, and Ideal Products Inc., located in Beacon Falls, CT, were sold to Orbitform LLC. Chicago-based American Rivet Company Inc. was sold to Jebco Screw & Rivet Mfg. Company; and Landreth Metal Forming Inc. of Houston was sold to Landreth Fastener Corporation. EPG has $38 million in annual sales and 330 employees. Following the divestiture of EPG, Industrial Holdings merged with T-3 Energy Services Inc. and took that company�s name.
Editor�s Note: Richard Hagan is president of Pinnacle Capital Corporation. Pinnacle is located at 74 Trinity Pl. #1205. New York, NY 10006. Tel: 212 267-8200 Fax 212 267-7811
E-mail: rphagan@comcast.net �2002 FastenerNews.com \