Target: Fasloc Inc.
Seller: Sentinel Capital Partners
Buyer: DSI USA
Financial Advisor: Seller: Harris Williams
The buyer is Bolingbrook, Ill.-based DSI USA, a maker of roof support bolts used in underground mining. New York-based Sentinel Capital declined to disclose the terms of the sale, which resulted from a Harris Williams & Co.-run auction. DSI is the U.S.-based division of Munich, Germany-based DYWIDAG-Systems International.
The sale of Martinsburg, W.Va.-based Fasloc came after a relatively short holding period. The buyout shop had acquired Fasloc from E.I. Dupont de Nemours, the Wilmington, Del.-based chemical giant, in 2005. Fasloc’s resins act as an industrial-strength glue, and its clients include many of the nation’s coal mines. Fasloc isn’t a supplier to DSI.
“Fasloc was the classic corporate orphan—a small business in Dupont that didn’t connect to any others,” said Sentinel Capital partner Paul Murphy. He added, “We saw it had a very good management team, a loyal work force, and was a market leader in the coal industry.”
Coal mining safety has become an important issue in recent years in the wake of several well-publicized disasters. Sentinel Capital acquired Fasloc only two months before a blast, in January of 2006, at the Sago, West Va., coal mine. Twelve miners died. The year before, 22 miners died in accidents in coal mines, according to The New York Times.
While Sentinel Capital owned Fasloc, EBITDA rose 60%, in part due to growing concern over safety stemming from the Sago tragedy, and in part because of the growing popularity of coal as a source of energy, said David Lobel, co-founder and managing partner of Sentinel Capital. The firm incentivized employees through stock and performance-based bonuses, he added.
Sentinel Capital’s equity investment in Fasloc came from its 2005-vintage, $319 million
Sentinel Capital invests in the consumer, services and industrial manufacturing sectors. Within the consumer market, it concentrates on consumer products, franchising and foods. Lobel and John McCormack, a senior partner with Sentinel Capital, founded the buyout firm in 1995. Prior to that, both worked for six years together at First Century Partners, Smith Barney’s venture capital affiliate. —E.B.