New York-based buyout firm Jacobson Partners last month picked up Corning Inc.’s divested appliance controls group. The firm took the large majority of the company, approximately 80% to 85%, while the management purchased a minority stake. The terms of the deal were not disclosed.
The unit is made up of Harper-Wyman and OakGrigsby Inc., which Corning acquired through its merger with Oak Industries Inc. in 1999. The unit manufactures internal components for the gas range and grill industry, such as valves, manifolds and top burners. The Corning unit is the no. 2 player in its industry and nearly the same size as the no. 1 player, said Chris Heinz, a principal at Jacobson Partners.
Although the value of the deal is undisclosed, Heinz said Jacobson Partners typically looks to invest $5 million to $10 million in equity in companies of $50 million to $150 million in revenue with enterprise values of $15 million to $50 million. This deal falls right in those ranges, he said.
The deal is being financed with two senior debt tranches – one that will be expended on the company’s Mexico operations – from an undisclosed lender.
Jacobson partners was attracted to the strong management team already in place in the businesses. “The management team had done a lot to improve the business,” said Heinz. “So it was a company that was already stabilizing, but could still be had for a turnaround price.”
Additionally, Jacobson, which targets “unwanted stepchildren of large corporate parents” plans to unlock the unrealized value of the company through its in-house operational expertise. As with most divested non-core assets, the appliance controls group did not the get attention from Corning that it will receive as an independent company. Therefore, the growth plans for the company are mainly to thrive as a new entity. Heinz added that the management’s minority stake should act as an incentive for growth and that the company will take a more entrepreneurial approach with increased operational efficiency.
Corning retained Salomon Smith Barney to sell the company.