Inking its second public-to-private deal in the last three months, Heartland Industrial Partners at the end of September agreed to acquire Simpson Industries Inc., a Nasdaq-traded auto parts manufacturer, for approximately $350 million.
The deal has received debt financing commitments from Chase Manhattan and Credit Suisse First Boston.
Should the transaction close, each Simpson shareholder will receive $13 per share for a total of 17.87 million shares outstanding.
Simpson makes engine, suspension, chassis and other motor vehicle components for automobile manufacturers. Its 1999 revenue reached $532.7 million.
Simpson is one of the two biggest machining companies in North America, said Dan Tredwell, a partner at Heartland, citing this as one of the reasons his firm was attracted to Simpson.
“These guys, in particular, set themselves apart because they have a great capability for design, engineering and assembly, rather than just pure machining,” Tredwell said. “They have a great management team very high quality people and assets.”
Heartland is well on its way to assembling a full service provider of metal products – a one-stop-shop for auto companies’ metal needs – one of its goals upon entering the market last year. Former Blackstone Group partner David Stockman, as well as Tim Leuilette, the former president and chief operating officer of Penske Corp., and Tredwell, formerly with Chase Securities, set out to raise Heartland’s debut $2 billion fund early this year, focusing on automotive supply, chemicals and basic metal forming as targets.
In the third quarter, the firm closed its first deal, purchasing MascoTech Inc., a Detroit-based engine components manufacturer for $760.5 million (Buyouts Aug. 14, p. 8).
Therefore, Heartland’s first two deals have both been public-to-private transactions.
“We’re not necessarily shopping the public markets exclusively,” Tredwell said, adding, “we’re just shopping for things we can buy and the type of assets we want. It just so happens that so many public companies are trading at such poor valuations these days that their owners are saying, I want to find a better way to unlock value’.”
Heartland held a first close for its fund on approximately $1 billion in May and plans to wrap the fund early next year (BUYOUTS May 29, p. 1).