Thule agrees seventh deal

Thule, a Sweden-based car accessories and trailer company, has continued its acquisition strategy under private equity ownership by agreeing its seventh deal since 2004.

Thule has agreed to pay just less than US$250m for three of the four operating divisions of Advanced Accessory Systems, a US-based manufacturer of automotive roof racks and towing systems owned by private equity firm Castle Harlan.

The proposed sale by AAS will include Brink International, a European manufacturer and distributor of towing systems, related accessories and specialised trailers; Valley Industries, North America’s second largest supplier of towing systems and related accessories; and SportRack Accessories, a Canadian manufacturer and distributor of roof racks, rooftop cargo boxes and hitch-mounted accessories that will complement Thule’s existing US accessories business.

Alan Johnson, president and chief executive officer of AAS, said Thule initiated the negotiations and had made “a substantial offer for the three businesses”, which had revenues of US$245m in 2005.

Johnson added: “This transaction will allow AAS management to concentrate all of its energies on our principal business, SportRack Automotive, which is the leading supplier of roof racks to all major original equipment automotive companies [and] had revenues of US$200m last year.”

Castle Harlan had paid JPMorgan Partners, the buyout arm of the US investment bank, US$260m for AAS in April 2003.

Anders Pettersson, Thule’s chief executive since 2002, said the company would now work on the integration of AAS and, a previously family-owned German rental trailer company with annual sales of €2.5m (US$3.2m) that will be renamed Thule Rental, and organic growth rather than look for more deals.

The two acquisitions follow a spate of bolt-on deals by Thule under private equity ownership.

As a portfolio company of Nordic buyout firm EQT from 1999, Thule acquired American recreational trailer manufacturer C&C Trailers and Italy-based international snow chains producer König in early 2004.

UK-based private equity firm Candover then paid €465m for three-quarters of Thule, with the rest owned by management and its board of directors, in October that year. On top of the two most recent deals under Candover’s ownership, Thule bought Star Industrier and Omnistor Accessories in 2005 and Pewag in March 2006.

Thule is paying for AAS and by adding debt, arranged by The Royal Bank of Scotland, which had provided the original borrowings to fund Candover’s 2004 purchase of the company.

Thule is expected to have net debt of SKr4.2bn (US$571.5m) and pro forma Ebitda of €92.4m on sales of about €660m after the latest acquisitions.

Thule had annual sales of SKr3.16bn and Ebita of SKr391m before one-off items in 2005, although its first-quarter results this year showed sales of SKr905m and operating profit of SKr94m.

Jefferies advised Candover on the latest transaction.