KPS Capital Partners said June 19 that it has agreed to sell Chassis Brakes International Group to Hitachi Automotive Systems Ltd, a subsidiary of Hitachi Ltd. Financial terms weren’t announced. Chassis Brakes, of Eindhoven, The Netherlands, makes automotive foundation brakes and foundation brake components. UPDATE: The transaction is valued at $690 million euros ($773 million), a source familiar said. The sale will produce a 6x return for KPS, the person said.
KPS CAPITAL PARTNERS TO SELL CHASSIS BRAKES INTERNATIONAL TO
HITACHI AUTOMOTIVE SYSTEMS
New York, NY (June 19, 2019) — KPS Capital Partners (“KPS”) announced today that it has signed a put option agreement to sell its portfolio company Chassis Brakes International Group (“Chassis Brakes” or the “Company”) to Hitachi Automotive Systems, Ltd. (“Hitachi Automotive”), a wholly-owned subsidiary of Hitachi, Ltd. (TSE/TYO: 6501). Works council consultations will be conducted, and completion of the transaction, which is expected in 2019, is subject to customary closing conditions.
Chassis Brakes is a leader in automotive safety solutions and one of the world’s three largest manufacturers of automotive foundation brakes and foundation brake components. Headquartered in Eindhoven, The Netherlands, the Company’s primary products include brake calipers, disk brakes, drum brakes and parking brakes. The Company focuses on developing safer, cleaner, smarter solutions that will support mega-trends impacting the automotive industry, such as connectivity, electrification and autonomous driving. Chassis Brakes operates 12 world-class, state-of-the-art manufacturing facilities, as well as 11 engineering centers and sales offices in Europe, Asia, India, North America and South America and has nearly 5,500 employees worldwide.
KPS created Chassis Brakes in 2012 to acquire the global automotive foundation brakes business of Robert Bosch GmbH in a highly complex global corporate carve-out transaction. Under KPS’ ownership, Chassis Brakes was transformed into an independent, fast-growing and innovative global business, and leveraged its industry-leading technological portfolio of products and capabilities into supply relationships with substantially all of the world’s global automotive companies.
KPS made Chassis Brakes a better business by assembling a world-class management team led by Chief Executive Officer Dr. Thomas Wünsche, constructing four new state-of-the-art foundation brake assembly facilities (in Poland, China, India and Mexico), constructing four new state-of-the-art engineering and R&D centers (in Germany, India, The Netherlands and China), and successfully expanding into the North American automotive market.
Under KPS’ ownership, Chassis Brakes invested an aggregate €230.0 million in R&D and applied engineering, which resulted in commercializing three new transformational products: the “ZOHe” brake caliper, the disc-integrated automated parking brake (“APB-Mi”) and drum-integrated automated parking brake (“APB-Di”).
Chassis Brakes also invested significant capital in R&D and engineering to develop its Smart BrakeTM and the world’s first demonstration car operating exclusively with these electromechanical brake actuators (versus traditional hydraulic brake actuators) on four wheels, which was unveiled at the Winter Test 2019 in Sweden.
Michael Psaros, a Co-Founder and Managing Partner of KPS, stated, “Chassis Brakes exemplifies the KPS investment strategy of seeing value where others do not, buying right and making businesses better, across decades, economic and business cycles, geographies and industries.
“We are proud of Chassis Brakes’ extraordinary transformation under our ownership. Chassis Brakes demonstrates our ability to build industry-leading manufacturing companies on a global basis. The Company’s success is a result of KPS’ investment in R&D, application engineering, innovative new technologies and products, new manufacturing facilities and our people. We congratulate and thank Dr. Thomas Wünsche, Chassis Brakes’ Chief Executive Officer, and the company’s senior management team for their strategic vision and brilliant execution, and our employees worldwide for their passion for excellence.”
Dr. Wünsche added, “Working in partnership with KPS, Chassis Brakes became a far better business by investing significantly in our operations, products, technology and people. We thank KPS for providing our team with the expertise, capital and resources needed to grow our business and to further our culture of innovation and continuous improvement. We are very excited about Chassis Brakes’ future under Hitachi Automotive’s ownership. Chassis Brakes will remain committed to our core strategic values of providing our customers with the highest levels of product quality, innovation and customer service. We thank our customers, suppliers and employees for their contributions to our success.”
Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel, and Citigroup Global Markets, Inc. served as financial advisor to KPS and Chassis Brakes with respect to the transaction.
About Chassis Brakes
Chassis Brakes International Group is one of the world’s three largest manufacturers of automotive foundation brakes and foundation brake components. Headquartered in Eindhoven, The Netherlands, the Company’s primary products, which include safety-critical brake calipers, disk brakes, drum brakes and parking brakes, are sold directly to substantially all of the world’s leading automotive companies and through aftermarket channels. Chassis Brakes operates 12 world-class, state-of-the-art manufacturing facilities, as well as 11 engineering centers and sales offices in Europe, Asia, India, North America and South America and has nearly 5,500 employees worldwide. For more information, please visit www.chassisbrakes.com.
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 $5.8 billion, operate 100 manufacturing facilities in 27 countries, and have over 22,000 employees, directly and through joint ventures worldwide. The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.