Blackstone Group to buy US industrial-products maker Gates for $5.4 bn
05 April 2014
US private equity firm Blackstone Group yesterday struck a deal to buy industrial-products maker Gates Global Inc from Onex Corp and Canada Pension Plan Investment Board (CCPIB) for $5.4 billion.
The deal is the biggest leveraged buyout for Blackstone since 2007, after it acquired Hilton Worldwide Holdings for $26 billion.
Gates Global had come into Onex and CPPIB's portfolio through their $4.37 billion acquisition of Tomkins in 2010, a British industrial holding company that operates a number of businesses serving the general industrial, automotive and construction markets around the globe. (See: Tomkins agrees to be acquired by Canadian investors for £2.87 billion)
Since the acquisition, Onex and CPPIB have sold eight non-core businesses of Tomkins for almost $5 billion, some of it to reduce the company's debt.
Both the Canadian companies have been exploring a sale of Gates Global for more than a year, and have been pursuing a dual-track strategy, including filing in December 2013 for an initial public offering to raise around $100 million.
Denver-based Gates Global is a leading global manufacturer of power transmission belts and fluid power products that are highly engineered and critical components, used in diverse industrial and automotive applications.
Gates Global generates a majority of its $2.9 billion sales from North America and replacement markets around the world.
''It was a tough decision to sell Gates. We don't see many industrial businesses with its global brand recognition,'' said, Seth Mersky, a senior managing director of Onex.
''Nonetheless, Onex shareholders and our limited partners have done very well. We have thoroughly enjoyed partnering with the Tomkins management team and wish them continued success.''