Onex Corp and the Canada Pension Plan Investment Board (CPPIB), which acquired Tomkins in 2010 for $5 billion including debt, will also explore an outright sale of Tomkins to another company in what is known as a “dual track” process, the people said.
Reuters reported on Nov. 22 that the buyout firms were interviewing investment banks to sell Tomkins to another party or float it in the stock market, with a process to explore both possibilities expected to start in the first quarter.
The people asked not to be identified as the matter is not public. Representatives of Tomkins, Onex and Morgan Stanley did not immediately respond to requests for comment. CPPIB, Bank of America and Goldman Sachs declined to comment.
London-based Tomkins has operations in over 30 countries and sells products ranging from power transmission systems to acrylic bathtubs in over 70 countries, according to its website.
It had adjusted 12-month EBITDA of $536 million as of the end of September and net debt of roughly $1.5 billion, according to Onex’s third-quarter earnings statement.
The company serves a broad range of sectors including oil and gas, mining, construction, agriculture, transportation, automotive and manufacturing. Its Gates Corp division, which accounts for most of the company’s business, is headquartered in Denver, Colorado, and employs more than 14,000 people.
Founded in 1925 as a small manufacturer of buckles and fasteners, the company expanded into a multi-industrial conglomerate through a series of deals, which included the 1987 acquisition of gun maker Smith & Wesson and the 1996 takeover of U.S.-based Gates Corporation. The Gates deal signaled its move into the industrial and automotive markets.
The company was once one of Britain’s largest industrial groups and dubbed the ‘buns-to-guns’ company in its 1990s heyday because it owned both food group Rank Hovis McDougall and .357 Magnum maker Smith & Wesson.
Onex, CPPIB and Tomkins’ management invested $2.2 billion as equity when they took Tomkins private in 2010. In September 2012, CCPIB agreed to acquire Tomkins’ air distribution division, which makes products for air-conditioning systems, for about $1.1 billion.
Prior to that divestiture, the company had already sold five other non-core businesses for total proceeds of almost $1 billion, which were used primarily to reduce Tomkins’ debt following the leveraged buyout by Onex and CPPIB.
Greg Roumeliotis and Soyoung Kim are reporters for Reuters News in New York