MiddleGround Capital’s Banner Industries snapped up Supra Alloys and EDGE International in a deal valued at approximately $70 million, PE Hub has learned.
It’s unclear if the purchase price matches industry averages, but assets in the sector typically trade at 8x to 10x EBITDA, a source close to the deal said. No other financial details were disclosed.
For Banner, the deal represents its effort to build out its product line and geographical footprint. The deal’s signing last week follows a long-drawn negotiation, MiddleGround partner John Stewart, told PE Hub.
“We started looking at the deal about a year ago,” Stewart said.
At the time, the parent company – Titan Metal Fabricators – was up for sale instead of the two divisions.
“The sellers wanted to sell the whole business and not break it up,” Stewart said. The management team reached an agreement in February following Banner’s December 2019 acquisition. The due diligence processes began in the same month and the PE firm signed the letter of intent in March, he said
Much like the platform company, the acquired businesses serve essential businesses such as medical device manufacturers.
The combined company will process metals from mills and manufacture highly controlled tight-tolerance materials that can be used in ventilators and in the dental and aerospace industry, explained Stewart.
The differentiation lies in the metal procured. “Supra and Edge are about 90 percent titanium; Banner is mostly steel,” he said.
In addition, Banner, of Carol Stream, Illinois, will expand its geographical reach through this merger. Supra is headquartered in Camarillo, California, whereas Edge is based in Dayton, Ohio.
The mostly equity deal was funded through MiddleGround’s debut fund of $459.50 million, which closed in August 2019.
The PE firm has already deployed nearly half of the fund, or $193 million, including Banner’s recent pair of deals.
“We plan to keep the products and employees for all brands intact,” Stewart said, speaking from his home in Lexington, Kentucky, where he said things are getting back to normal.
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