San Francisco-based private equity firm Genstar Capital LP earlier this month acquired power transmission manufacturer Colfax Power Transmission Group (CPT) from Colfax Corp. Concurrent to the acquisition, Genstar merged CPT with recently acquired ball-bearing manufacturer Kilian Manufacturing Corp. to form a new entity called Altra Industrial Motion Inc.
For the 12 months ending Oct. 1, CPT’s and Kilian’s combined revenues were $336 million and adjusted earnings were $36 million. Purchase prices for the individual companies were not disclosed, but Genstar said it acquired both CPT and Kilian for a total purchase price of approximately $200 million before fees and expenses. To finance the acquisition, Altra Industrial Motion issued $165 million in senior secured notes led by Jefferies & Co.
The remainder of the purchase price was financed with equity provided by Genstar, Caisse de depot et placement du Quebec (a Genstar limited partner), and the Altra management team. Altra also entered into an undrawn senior revolving credit facility provided by Wells Fargo Foothill.
Michael Hurt, a veteran in the power transmission space and former head of Kilian in the late 1970’s, has been tapped by Genstar to serve as CEO of Altra.
Based in Quincy, Mass., CPT is a holding company for businesses that produce gear boxes and clutches for conveyer belts and other manufacturing equipment that are used by manufacturers in end markets such as mining, food processing, packaging and oil and gas production. Companies under the CPT umbrella operate from facilities in North America, Europe and China.
Fitting Genstar’s niche in the manufacturing space, CPT first caught firm’s attention in 2000 and, according to Genstar Vice President Darren Gold, the firm has continually knocked on the company’s door until it was finally able to pry it loose from its parent almost two weeks ago. Similarly, Kilian Manufacturing was purchased from its parent company, The Timken Co., in a deal that closed this past October. Kilian produces machined-race bearings, including ball and roller bearings and assemblies, for industrial and automotive applications.
“Our thesis when we bought Kilian was to make add-ons and create a larger platform. And with this [latest investment and merger], we think we hit the nail right on the head,” Gold said.
Brand strength was essential for the CPT investment. Of the nine brands held by the company, two of them – Boston Gear and Warner Electric – have been around since the late 1800’s and, according to Gold, are industry leaders. Going forward, the Kilian name, along with the nine individual brand names held by CPT will remain intact under the Altra banner. The only name to be dropped is CPT’s, Gold said.
With the goal of building a “preeminent global platform for power transmission services,” Gold said that Genstar will focus the first year or two on solidifying the Altra platform and growing it organically before making add-ons to increasing the breadth of its product line and geographic presence.
The Altra and BP/Propex acquisitions were both made with equity from Genstar Capital Partners III LP, which closed in July 2001 with $221 million. Fund III is now closed with a “substantial amount” of its capital set aside to shore up its current portfolio companies, Gold said.
Genstar recently made its first investment with Genstar Capital Partners IV LP, a $475 million fund that closed in October. Aside from confirming it, both Gold and a Genstar spokesperson declined to comment further on the newest deal.