When Behrman Capital made its investment in Hunter Defense Technologies last year, it was clear the firm was making a play at the rapidly expanding defense budget. With the U.S. occupations of Iraq and Afghanistan, Hunter’s filtration systems and heating equipment have been in high demand. Expanding on that trend, and rounding out the company’s offerings, Hunter in March acquired military tent maker Bea Maurer Inc., the manufacturer of Base-X Expedition Shelters.
“There is a trend toward more expeditionary forces as opposed to fixed bases,” Behrman Managing Partner Grant Behrman said, adding that Bea Maurer gives the firm more of a reach into homeland security as well, with emerging applications such as decontamination and first responder shelters.
“The procurement budget is growing approximately 10% per annum, and homeland security applications are growing more quickly than that,” Behrman said.
Bea Maurer, meanwhile, has been able to grab onto that growth and itself has produced annual EBITDA expansion in excess of 50% for the last three years. The Hunter/Base-X union will give the combined company revenues in excess of $100 million.
In addition to simply growing the top line, the merger makes sense considering the pairing often submitted joint bids for various military projects. Behrman noted that the driver behind the marriage was primarily the ability to provide a bundled system solution with heaters, protection filters and now the shelters being sold as a single product.
Hunter has been around since 1937, and was providing military heaters during World War II. Bea Maurer, meanwhile, was founded by its namesake, who in 1981 was hired to sew tents for Appalachian Outfitters, an outdoor equipment retailer. Maurer carved out the five-person sewing outfit two years later, and from its humble beginnings in Maurer’s basement, she was able to grow the company into what it is today.
The sale of Bea Maurer gives the business an enterprise value of $80 million. To complete the acquisition Hunter pursued a recapitalization in which Behrman put more equity into the business. The firm’s ownership stake, however, shrunk to approximately 70% of the combined company, from its 80% stake in Hunter prior to the deal.
As part of the recap, Hunter obtained a $15 million revolving credit facility and a $95 million term loan. Merrill Lynch Capital and Madison Capital Funding served as co-lead arrangers and joint book runners for the offering. Part of the proceeds from the recap will go toward retiring existing Hunter debt.
Behrman invested in Hunter through Behrman Capital III. The firm closed on the $1.3 billion fund in 2000, and has already deployed more than half of the capital. Berhman would not comment on when the firm will market a new fund.