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PE-backed ECI to buy Fargo Assembly Company

Electrical Components International Inc, a portfolio company of KPS Capital Partners, has agreed to acquire Fargo Assembly Company. No financial terms were disclosed. The deal is expected to close in the first quarter of this year. Based in Fargo, North Dakota, Fargo is a provider of wire harnesses for the motorcycle, agriculture, construction and specialty transportation sectors.

PRESS RELEASE

NEW YORK, Jan. 17, 2017 /PRNewswire/ — KPS Capital Partners, LP (“KPS”) announced today that its portfolio company, Electrical Components International, Inc. (“ECI”), has entered into a definitive agreement to acquire Fargo Assembly Company and certain of its affiliates (collectively “Fargo” or the “Company”). Financial terms of the transaction were not disclosed.

ECI is the world’s leading manufacturer of wire harnesses 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 19 manufacturing facilities in seven countries with approximately 15,000 associates worldwide. KPS acquired ECI in May 2014.

Fargo is a leading North American supplier of wire harnesses to the motorcycle, agriculture, construction and specialty transportation end-markets. The Company is an integral supplier to the leading motorcycle, agriculture and construction equipment and specialty transportation OEMs. Fargo manufactures heavy duty, complex wire harnesses, typically producing a significant array of unique part numbers for each of its key customers. The Company operates 15 manufacturing facilities in the U.S. and one manufacturing facility in the U.K. and employs approximately 1,900 associates.
Fargo is ECI’s third acquisition under KPS’ ownership. ECI acquired Global Harness Systems in 2015 and Whitepath Fab Tech in 2016.

Raquel Palmer, a Partner of KPS, said, “We are very proud of ECI’s extraordinary transformation to date under KPS’ ownership. KPS acquired ECI in 2014 as a platform for organic and strategic growth in the global wire harness industry. We have significantly expanded ECI’s presence in specialty-industrial end-markets and maintained ECI’s industry-leading position in the appliance end-market. ECI is poised to leverage its platform to aggressively pursue new business opportunities with existing and new customers in both North America and around the world.”

David Webster, Chief Executive Officer of ECI, said, “The acquisition of Fargo is an important step in ECI’s continued expansion and diversification. We are very impressed by the talented and dedicated team at Fargo and the Company’s unique product capabilities, technology and strong relationships with its customers. The Fargo acquisition allows ECI to expand its customer base to include key specialty-industrial OEMs and cross sell products into new geographies. Furthermore, we believe that by sharing best practices between ECI and Fargo, we can materially enhance our overall manufacturing operations by leveraging our joint culture of manufacturing excellence and continuous improvement. ECI intends to invest significant additional capital and resources into Fargo to ensure total customer satisfaction.”

Completion of the transaction is expected in the first quarter of 2017.

Paul, Weiss, Rifkind, Wharton and Garrison LLP is serving as legal counsel to KPS and ECI and its affiliates. Financing for the transaction will be provided by a syndicate of banks and institutional investors with BofA Merrill Lynch acting as Lead Arranger.

About Electrical Components International
ECI was founded in the 1950s and is headquartered in St. Louis, Missouri with 19 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 850 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 15,000 associates worldwide. For more information, please visit http://www.ecintl.com.

About Fargo Assembly Company
Headquartered in Fargo, North Dakota, Fargo is a leading provider of wire harnesses to the motorcycle, agriculture, construction and specialty transportation end-markets. Fargo operates 16 manufacturing facilities, seven located in North Dakota, four located in Pennsylvania and one located in each of Kansas, Mississippi, Missouri, Nebraska and the U.K. and employs approximately 1,900 associates.

About KPS Capital Partners, LP
KPS is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $5.5 billion of assets under management. KPS seeks to realize significant capital appreciation by making controlling equity investments in companies across a diverse range of manufacturing industries experiencing a period of transition or challenged by the need to effect immediate and significant change. The KPS investment strategy is based primarily upon partnering with world-class management teams to effect material and sustainable improvements in the operations of its businesses. Thereafter, KPS focuses on growing its businesses, both organically and through strategic acquisitions. The KPS Funds’ portfolio companies have aggregate annual revenues of approximately $3.9 billion, operate 87 manufacturing facilities in 23 countries, and employ approximately 38,000 associates, directly and through joint ventures worldwide. The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.