Ardian bulks up auto-parts platform with Dynamic Technologies

Ardian’s North America direct buyouts team agreed to acquire Dynamic Technologies, a global supplier of tubular components and precision aluminum parts to the automotive industry.

The firm will merge DT, based in Italy, with existing portfolio company Huron Inc. Headquartered in Detroit, Huron also makes tubular components for automotive OEMs.

In an interview with Buyouts, two Ardian executives said they saw opportunities for growth in manufacturing trends related to fuel-economy standards.

The deal was signed over the weekend and is expected to close in late June or early July. Terms were not disclosed. KeyBank and Kayne Anderson are together underwriting the debt financing. The latter is an existing lender to Huron.

“When we bought Huron back in August 2015, the intention was to use that as an acquisition platform,” said Kevin Kruse, managing director at Ardian. The team originally planned to find similar businesses for tuck-in acquisitions, but “DT is actually a bigger business than Huron.” The companies had combined revenue of $350 million in 2016.

The combined company will be based in North America. DT’s former chief executive, Walter Zonta, will be CEO. Robert Bales, Huron’s chairman, will assume that role at the merged operation.

“Because we had an existing portfolio company, we know the market well,” said Vincent Fandozzi, Ardian’s head of North America Direct Buyouts, “and it’s right in line with our strategy.”

The team came across DT about a year ago and maintained a relationship with the company, based on the similarity of its product line to Huron’s. Fandozzi said DT “was probably ranked highest” on a list of potential acquisition targets prepared by a third-party consultant who worked with the firm.

“Putting the two together,” said Kruse, “we certainly think that they’re very complementary businesses.” Huron has no overseas presence; in addition to Italy, DT has operations in Canada, Hungary, Poland, Mexico, the United Kingdom and China, but not the U.S. And Huron is a big supplier to Ford, while DT sells a lot to GM.

“They’re a lot alike in terms of how they think of customer solutions and approach their respective customers,” said Fandozzi, “but different in who they serve.”

Because the two companies’ facilities don’t overlap, “this is not about, in essence, putting them together and getting cost synergies,” Fandozzi said. Huron’s management team will continue to run the company as a wholly owned business within DT. “The story is much more about taking products that Huron is good at and selling them to DT’s customers, and taking products that DT is good at and selling them to Huron’s customers,” said Kruse.

Ardian will consider more add-ons to the platform but for the next year or so will focus on integrating the businesses and taking advantage of cross-selling opportunities.

Ardian’s North America Direct Buyouts team targets lower-middle-market industrial and related business service companies with EBITDA of $10 million to $50 million.

Action Item: Read more about Ardian North America here: http://bit.ly/2s1BWTQ

Photo of Vincent Fandozzi courtesy of Ardian