Slideshow: 5 Top Strategic Buyers Of Sponsor-Backed Companies

Corporations and other strategic buyers are presenting buyout shops with serious competition in today’s heated market, but they’re also supplying a rich source of exits, according to the Buyouts cover story, published June 20.

As of June 13, strategic buyers around the world bought 15,825 companies, including full or partial stakes, with a combined value of $1.2 trillion including the net debt of target companies, compared to 16,683 deals with a combined value of approximately $852 million for the same period last year, according to Thomson Reuters, publisher of Buyouts. Strategics were the most active buyers in deal activity during the first five months of the year, according to a study by Pricewaterhouse Coopers cited recently by peHUB, accounting for 82 percent of the deal volume, or 1046 transactions worth $384 billion. Financial buyers accounted for the rest.

With that in mind, Buyouts undertook an analysis of some of the most active strategic buyers of sponsor-backed companies since Jan. 1 2010. Altogether, the 10 strategics we identified bought or have agreed to buy 32 sponsor-backed companies since then with a combined deal value, including debt, of more than $13 billion. Thomson Reuters and Capital IQ were our primary sources.

Below are five of the top strategics. For the rest, go to Buyoutsnews.com.

Bernard Vaughan is a Senior Editor at Buyouts Magazine. Follow his tweets @BVaughanReuters.

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[slide title=”5. Roper Industries”]

The Sarasota, Fla.-based maker of imaging products and software, energy systems and controls, and industrial technology products, together with its subsidiaries, acquired five companies since January 2010, four of which were sponsor-backed. These included Northern Digital Inc., a designer of optical three-dimensional and electromagnetic tracking systems for health care and other sectors it bought from Audax Group; and its $520 million acquisition of iTradeNetwork Inc., a company that develops software that automates the supply chain for the retail and food service industries, from Accel-KKR and ABRY Partners LLC. Roper, with a market cap of around $7.5 billion, reported cash and cash equivalents of $261.45 million, and long-term debt of $1.16 billion, for the quarter ended March 31.

[slide title=”4. International Business Machines”]

Since January 2010, the information technology behemoth, with a market cap of approximately $197.6 billion, and its subsidiaries have made approximately 17 investments, including four acquisitions of sponsor-backed companies. These include the $450 million acquisition of Unica Corp., a provider of marketing services to companies in financial services, insurance and other sectors, from JMI Equity. The company reported $12.76 billion in cash and cash equivalents, and $21.7 billion in long-term debt, for the quarter ended March 31.

[slide title=”3. General Electric Co.”]

General Electric—always a good bellwether for the deal environment—and its subsidiaries have made several dozen investments, including acquisitions of four sponsor-backed companies during the time period studied. The $195 billion conglomerate’s deals included the $3 billion buyout of Dresser Inc., the maker of valves, meters, pumps and other industrial machinery, from Riverstone Holdings, First Reserve Corp., and The Carlyle Group. Another was its $520 million acquisition of Lineage Power Holdings Inc., a maker of electrical components for the telecommunications power market, from The Gores Group LLC, which bought the company in 2007 for $100 million. General Electric reported approximately $82.2 billion in cash and cash equivalents, and $287.6 billion in long-term borrowings, for the quarter ended March 31.

[slide title=”2. Ametek Inc.”]

Ametek Inc., a maker and seller of electronic instruments with a $6.7 billion market cap, made eight acquisitions, four of which were sponsor-backed companies since the beginning of 2010. Its largest was its $270 million acquisition of Haydon Kerk Motion Solutions Inc., a maker of screws, nuts and other industrial components for the aerospace and defense industry, from Harbour Group. The company reported $155 million in cash and cash equivalents for the quarter ended March 31. However, the company also reported more than $1 billion in long-term debt that could inhibit its ability to make investments.

[slide title=”1. 3M Co.”]

3M Co., the industrial conglomerate with a $65.3 billion market cap, and its subsidiaries made or agreed to make around 26 investments in other companies since the beginning of 2010, including the acquisition of four sponsor-backed companies. Most notably, the company bought Arizant Inc., a maker of temperature management systems for the health care industry. The price was approximately $810 million, the seller Court Square Capital Partners. Other deals included its $230 million acquisition of Attendi Ltd., an Israeli company that develops remote electronic monitoring technologies, from Francisco Partners Management, Sequoia Capital and other investors. 3M reported more than $2.7 billion in cash and cash equivalents, and long-term debt of $4.5 billion, for the quarter ended March 31.

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