Target: Essex Crane Rental Corp.
Price: $210 million
Sponsor: Hyde Park Acquisition Corp.
Seller: Kirtland Capital Partners
Financial Adviser: Seller: Houlihan Lokey Howard & Zukin
Legal Adviser: Sponsor: Jones Day ; Seller: Jones Day
After holding Essex Crane Rental Corp. for the better part of a decade,
John Nestor, the firm’s CEO, declined to discuss Kirtland Capital’s return. The firm acquired the Buffalo Grove, Ill.-based company in October 2000 for $165 million. It is unclear how much equity the firm put into for the initial deal. In March 2007, Kirtland Capital completed a $50 million dividend recapitalization to return money to its investors, according to a press release issued at the time of the recap.
Essex Crane’s management team is contributing $5 million to the deal; Kirtland Capital has agreed to kick in $5 million; and Macquarie Capital (USA) Inc. is adding another $1 million in equity. Hyde Park stockholders must approve the deal, expected to close in the second half of this year. Hyde Park, formed in December 2006, was nearing the closure of the 18-month window in which SPACs are required to make an acquisition or face a forced dissolution.
Essex Crane operates a fleet of 400 cranes and attachments, and purports to be the largest provider of Manitowoc lattice-boom crawler cranes and attachments. Its products are used for construction projects related to power generation, petro-chemical, refineries, water treatment and purification plants, bridges, highways, hospitals, shipbuilding and commercial construction.
Kirtland Capital wanted to sell the company now because it was performing at record levels and demand for its cranes remains strong for the foreseeable future, Nestor said. Last year Essex Crane posted $64.2 million in revenue and $37.2 million in EBITDA. The firm stuck with the company through the downturn of 2002 and 2003, when the recession of 2001 caught up with and severely slowed the commercial construction industry, Nestor added.
Investment bank Houlihan Lokey Howard & Zukin brokered the deal. Kirtland Capital entertained offers from a number of suitors, including domestic and international crane rental companies. It ultimately sold to Hyde Park because the offer presented a good return and because of the way the SPAC agreed to finance the deal—with almost 50 percent debt and equity. Nestor said that should leave the company with sufficient capital to invest in its fleet and possibly acquire competitors.
Hyde Park executives also impressed Nestor and Mike DeGrandis, managing partner, with the level of research they put into the company. Hyde Park, for example, commissioned a third-party study of the crane rental company. Laurence Levy, CEO of Hyde Park, and Edward Levy, president, also met face-to-face with Essex management numerous times to discuss its growth strategy.
“We try to consider what’s best for our LPs but also our management team,” Nestor said.
A call to Levy was not returned by deadline.—B.V.