Firm: Bregal Capital
Target: Mirror Controls International
Entry Price: $111 million
Sale Price: $225 million
Hold Period: 5 years
Advisers: Kaye Scholer’s corporate team represented Bregal Capital in the sale; Macquarie acted as sell-side financial adviser; and Allen & Overy acted for Egeria.
WHY THE FIRM WON
* Established the business as an independent operation with an international manufacturing footprint during tough times for the European automotive industry.
* All growth was organic.
* Helped the business set up three production locations in Ireland, Mexico and China.
* Under Bregal’s ownership, actuator sales have grown to over 40 million per year.
In 2007, when the purchase of MCi was completed, no one could have anticipated the strong headwinds bearing down on the automotive industry in the wake of the global financial crises.
Undeterred, Bregal Capital, together with management, stuck resolutely to their belief in the business and, during their period of ownership, MCi established itself as an independent operation with an international manufacturing footprint. The hard work, determination and insights of the management team over the last six years have been rewarded and, following the acquisition by Dutch mid-market private equity firm Egregia last August, the business is well positioned for the next stage of its development.
Founded in 1935, MCi is headquartered in Woerden, Netherlands. The company traces its product heritage back to the invention of the first mirror actuator by IKU, and its original application in the 1972 BMW automobile.
Today, the business manufactures a wide range of glass motors and powerfold motors, primarily for sales to mirror manufacturers of cars and light trucks in Europe, North America, Asia and South America. MCi has three production locations in Ireland, Mexico and China and its mirror actuator sales have grown to over 40 million actuators per year.
MCi products can be used in everything from compact cars and luxury sedans to sport utility vehicles and light or large, articulated trucks. Because mirror glass vibration stability is essential for safety, all MCi mirror actuators have an integrated vibration damping feature. As a result, no additional external damping devices are required.
But when Bregal Capital (then called Englefield Capital) acquired the business back in August 2007 it was quite a different story. Diversified industrial manufacturer Eaton Corp decided to sell its mirror controls division for around $111 million, according to industry sources. The mirror controls division was part of Eaton’s Automotive Group and at the time employed about 630 people at four manufacturing operations. Sales in 2006 were $135 million.
Florian Schick, partner at Bregal Capital, said: “MCi experienced a tremendous development since we acquired the business five years ago, especially when considering the turmoil caused by the financial crises. MCi has achieved growth and has performed exceptionally well during the economic downturn. It has been a pleasure to work with the management team around Mark van der Spek to help establish MCi as a stand-alone business and develop its international manufacturing footprint.”
The Kaye Scholer corporate team in London represented Bregal Capital in the sale of the business. The London team (Andrew Harris, Sean Scanlon and David Gerber) has a long and established track record of advising Bregal Capital. In particular, Harris advised the team on their establishment and initial €700 million ($917 million) fundraising in 2002 and has, subsequently, advised on most of their investments, acquisitions and disposals. “The widespread, global nature of the business lent an additional challenge to the exit process,” said Harris. “Nonetheless, due, in large part, to the pragmatic approach adopted by the parties, the transaction progressed pretty smoothly.”
Given MCi’s global footprint, this was a cross-border, international transaction led by Kaye Scholer co-ordinating lawyers in China, Ireland, Mexico, the Netherlands, South Korea and the United States. Macquarie acted as sell-side financial adviser and Allen & Overy acted for Egeria.
Mark van der Spek, CEO of MCi, said of the sale of the business: “Together with Bregal Capital, we have successfully developed and positioned MCI as the supplier and partner of choice to most of the global OEMs and mirror system providers following the separation from its former parent company in 2007.”