KPS Capital Partners agreed to sell Electrical Components International, which makes wire harnesses and provides assembly services for consumer appliances and specialty industrial applications, to Cerberus Capital Management. Terms of the deal were not disclosed. However, a person with knowledge of the situation said KPS will be making a more than 3x return on the sale. KPS invested in Electrical Components International in 2014.
KPS Capital Partners, LP (“KPS”) announced today that it has signed a definitive agreement, through an affiliate, to sell Electrical Components International, Inc. (“ECI” or the “Company”) to an affiliate of Cerberus Capital Management, L.P. Financial terms of the transaction were not disclosed.
ECI is the world’s leading manufacturer of wire harnesses, control boxes and value-added assembly services for consumer appliance and specialty-industrial applications. ECI manufactures products for a variety of electronic and electro¬mechanical applications for customers worldwide in a diverse range of end-markets, including home appliances, agriculture and construction, heating, ventilation and air conditioning (HVAC), specialty transportation, automotive, commercial appliance and commercial electronics. ECI currently operates 35 manufacturing facilities in seven countries with approximately 20,000 associates worldwide. Over the past three years during KPS’ ownership, ECI acquired and integrated the acquisitions of Global Harness Systems (January 2015), Whitepath Fab Tech (May 2016) and Fargo Assembly Company (February 2017).
Raquel Palmer, a Partner of KPS, said, “The success of our investment in ECI demonstrates KPS’ ability to see value where others do not, to buy right and to make businesses better. KPS, in partnership with management, completely transformed ECI from a wire harness supplier focused on the appliance end-market to a diversified manufacturer of value-added components serving a broad range of industrial end-markets. Under KPS’ ownership, the Company completed three highly synergistic acquisitions, invested in new manufacturing facilities globally, more than doubled the size of its customer base and significantly expanded its presence in specialty-industrial end-markets. We take immense pride in the Company’s accomplishments. ECI is another example of KPS’ investment strategy achieving success across economic cycles, geographies and industries.
Ms. Palmer added, “We congratulate and thank the ECI management team for their ambitious strategic vision combined with extraordinary tactical execution, which resulted in the Company’s significant revenue growth, end-market and customer diversification under our ownership.”
David Webster, Chief Executive Officer of ECI, added, “KPS was the only investor to recognize the potential value of our business in 2014. Working in partnership with KPS, we invested significantly in our people and operations, focusing on employee engagement, manufacturing excellence and providing best-in-class product quality and support to our global customer base. We are grateful to KPS for providing our team with the expertise, capital and resources needed to acquire and integrate three acquisitions and to further our culture of continuous improvement. ECI remains committed to our core strategic imperatives related to our people and our customers. Moreover, ECI’s management team will continue to own a part of the Company alongside our new partners, who will provide additional capital and resources in order to promote continued revenue growth and customer, end-market and geographic diversification. We thank our customers, suppliers and employees for their contributions to our success.”
Completion of the transaction, which is expected during the third quarter of 2018, is subject to customary closing conditions and approvals.
Paul, Weiss, Rifkind, Wharton and Garrison LLP served as legal counsel and Barclays served as exclusive financial advisor to KPS and ECI with respect to the transaction.
About Electrical Components International
ECI was founded in the 1950s and is headquartered in St. Louis, Missouri with 35 manufacturing facilities, 19 distribution centers and sales and engineering offices located in North America, South America, Asia, Europe and Africa. ECI is the leading global manufacturer and marketer of wire harnesses and provider of value-added assembly services for the home appliance industry and is a leading provider of wire harnesses to a diverse range of end-markets. ECI has over 500 customers globally and its products can be found in a wide variety of electronic and electro-mechanical applications, including home appliances, agriculture and construction, heating, ventilation and air conditioning (HVAC), specialty transportation, automotive, commercial appliance, and commercial electronics. ECI employs approximately 20,000 associates worldwide. For more information, please visit www.ecintl.comhttp://www.amefird.com/.
About KPS Capital Partners, LP
KPS is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $5.4 billion of assets under management. 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 have aggregate annual revenues of approximately $7.0 billion, operate 165 manufacturing facilities in 31 countries, and employ nearly 50,000 associates, directly and through joint ventures worldwide. The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.