Golden Gate Capital’s success with its latest realized investment is just one more indicator that tech-focused buyout shops may have the right idea after all.
Golden Gate acquired Itronix Corp. in 2003 when its parent company, Acterna Corp., filed for Chapter 11 bankruptcy. Intronix is a maker of durable handheld and laptop computers used by the military and public safety agencies. Golden Gate purchased the auctioned-off division and flipped it in under two years in a deal that officially closed Sept. 2.
“We ended up buying a good company with good management and a great value,” said Ken Diekroeger, a managing director at Golden Gate.
Although other sources reported that the value of the sale was in the $200 million range and that Golden Gate made roughly an 8x to 10x return on its equity, Diekroeger would not comment.
Golden Gate acquired the company with $40 million in a September 2003 auction. In turn, the San Franciscobased buyout shop turned to Merrill Lynch to run its sale of Itronix, a process that saw strategic bidder General Dynamics come out on top.
General Dynamics, which is headquartered in Falls Church, Va., earned revenue of $19.2 billion in 2004. The leading niche technology company specializes in mission critical information systems and technologies, land and expeditionary combat systems, and shipbuilding and marine systems. Because Itronix’s wireless computing solutions are designed to perform and hold up under the toughest of circumstances, they should fit in well with General Dynamics’ product line and services, which cater to U.S. defense and homeland security customers, the company said.
“General Dynamics has the resources to give them a strong sales presence,” Diekroeger said.
Itronix already supplies to mobile workers in the commercial field services, telecommunications, utilities, government and public safety fields.
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