Autokiniton Global Group, a North American supplier of metal-formed components and complex assemblies to the automotive industry, has agreed to acquire Tower International Inc, a maker of engineered automotive structural metal components and assemblies, for $31 per share. AGG is a portfolio company of KPS Capital Partners.
NEW BOSTON, Mich. and LIVONIA, Mich., July 12, 2019 /PRNewswire/ — Autokiniton Global Group (“AGG”), a leading North American supplier of metal-formed components and complex assemblies to the automotive industry, and Tower International, Inc. (NYSE: TOWR), a leading manufacturer of engineered automotive structural metal components and assemblies, today announced they have entered into a definitive agreement for AGG to acquire Tower for $31 per share in cash. AGG is a portfolio company of KPS Capital Partners (“KPS”), a leading global private equity firm with over $5.0 billion of assets under management.
The all-cash transaction represents a 70% premium to Tower’s closing stock price on July 11, 2019. Including Tower’s debt and pension related liabilities, the total value of the transaction is approximately $900 million.
“We are extremely pleased to reach agreement with AGG on a mutually beneficial transaction that creates substantial value for Tower stockholders, customers and colleagues. Tower stockholders benefit from an immediate share price premium,” said Tower President and CEO Jim Gouin. “Tower customers will benefit from the expanded product offering and manufacturing footprint of Tower and AGG. Finally, Tower colleagues will benefit by becoming a part of a combined entity which will be a more competitive North American supplier with a complementary manufacturing footprint and lightweighting technologies that uniquely position it for continued profitable growth.”
“The acquisition of Tower will significantly enhance AGG’s position as a leading North American manufacturer of metal formed components for the automotive industry,” said AGG CEO George Thanopoulos. “The combination of these two companies creates synergistic value by lowering overall cost, significantly broadening our product offerings and diversifying our customer base. We are excited to bring Tower’s world-class products, well-positioned facilities and highly-skilled workforce into AGG. Following the transaction, AGG will remain conservatively capitalized, with capital resources to fund product-focused research and development, technology and significant organic growth. AGG remains committed to providing our current and future customers with world-class product quality and customer service.”
The transaction is anticipated to close in September or October of 2019.
Terms of the Transaction
Under the terms of the definitive merger agreement, AGG will commence a tender offer no sooner than August 14, 2019 and no later than August 19, 2019 to acquire all of the outstanding shares of common stock of Tower for $31.00 per share in cash. The tender offer will be subject to customary closing conditions, including the tender of at least a majority of the outstanding shares of Tower common stock and the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Following the closing of the tender offer, a wholly-owned subsidiary of AGG will merge with and into Tower (the “Merger”), with each share of Tower common stock that has not been tendered being converted into the right to receive the same $31.00 per share in cash offered in the tender offer.
The definitive agreement includes a 35 day “go-shop” period, which permits Tower’s Board and financial advisor to actively initiate, solicit and consider alternative acquisition proposals. Tower will have the right to terminate the merger agreement to accept a superior proposal subject to the terms and conditions of the merger agreement. There can be no assurance that this 35 day “go-shop” will result in a superior proposal, and Tower does not intend to disclose developments with respect to the solicitation process unless and until the Board makes a determination requiring further disclosure.
Tower will file its quarterly report on Form 10-Q reporting its second quarter financial results but does not intend to host a quarterly earnings call. Additionally, Tower has agreed to forego paying dividends through the consummation of the transaction.
J.P. Morgan Securities LLC is serving as exclusive financial advisor for Tower and rendered a fairness opinion. Houlihan Lokey Capital, Inc. provided an additional fairness opinion for Tower. Lowenstein Sandler LLP is serving as the legal advisor to Tower. Goldman Sachs & Co. and Bank of America Merrill Lynch, are serving as the financial advisors for AGG and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as the legal advisor to AGG.
Tower International, Inc. is a leading manufacturer of engineered automotive structural metal components and assemblies primarily serving original equipment manufacturers. Tower offers automotive customers a broad product portfolio, supplying body-structure stampings, frame and other chassis structures, and complex welded assemblies for small and large cars, crossovers, pickups, and sport utility vehicles. Headquartered in Livonia, Michigan, Tower has approximately 5,700 colleagues and 2018 full-year revenue of $1.6 billion. Tower’s manufacturing is conducted in 14 manufacturing facilities strategically located throughout the United States, Mexico, and Brazil. These facilities are supported by five engineering and sales locations throughout the world.
About Autokiniton Global Group
AGG is a leading North American supplier of metal-formed components and complex assemblies to the automotive industry. AGG manufactures body structures, interiors, closures, thermal management components, and chassis components. Headquartered in New Boston, Michigan, AGG has a product portfolio that is well-positioned for key automotive trends, including electrification, lightweighting, emission reduction regulations and increased cross over utility vehicle/sport utility vehicle (CUV/SUV) penetration. AGG maintains long-standing relationships with its blue-chip customers including General Motors, Ford, Nissan, Fiat Chrysler Automobiles, Honda, Tesla and BMW.
About KPS Capital Partners
KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $5.0 billion of assets under management (as of March 31, 2019). For over two decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing. KPS creates value for its investors by working constructively with talented management teams to make businesses better, and generates investment returns by structurally improving the strategic position, competitiveness and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds’ portfolio companies currently have aggregate annual revenues of approximately $6.8 billion, operate over 100 manufacturing facilities in 28 countries, and have nearly 25,000 employees, directly and through joint ventures worldwide. The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.