Although New York-based private equity firm Kelso & Co. L.P. declined to either affirm or deny its rumored $1.6 billion MBO of Nortek, the building products company itself has issued a statement stating that it has received a formal proposal from Kelso saying the private equity firm will acquire it in partnership with certain members of the company’s current management.
Subsequently, Nortek has formed a special committee to analyze the offer, but “has made no determination as to whether the company will or should be sold, whether on the terms of the Kelso proposal or otherwise.” Under the terms of the proposal, Nortek will continue to operate under its current name and operating structure.
Nortek is a Providence, RI-based publicly traded designer, manufacturer and marketer of building products. The company’s 2001 net sales were $1.86 billion, up slightly from 2000. Similarly, Ebitda was $217 million, earnings were $34.5 million and diluted earnings per share were $3.09.
Under the terms of the Kelso proposal, all stockholders of the company (with the exception of certain members of management) would receive $40 per share in cash. Moreover, Nortek’s management team would retain a substantial portion of its existing equity ownership interest in the post-transaction company, according to the statement Nortek issued. Richard Bready, the chairman and chief executive officer of Nortek, is leading the management buyout group.
Since 1980, Kelso has invested in more than 65 companies with a total enterprise value of more than $16 billion. The firm closed its most recent fund, Kelso Investment Associates VI L.P., in 1998 with $1.5 billion. Among its portfolio companies are American Standard, a global plumbing products company; Charter Communications, one of the ten largest cable television operators in the U.S.; family-food chain The International House of Pancakes; and casual clothing brand Wrangler.