One Equity Partners has agreed to acquire Sparton’s contract manufacturing unit. No financial terms were disclosed. The unit provides complex electromechanical solutions for a range of industries. The deal is expected to close during the third quarter of 2020. Lincoln International LLC is serving as financial advisor to Sparton while Kirkland & Ellis LLP is providing legal counsel.
DE LEON SPRINGS, Fla.–(BUSINESS WIRE)–Sparton Corporation (“Sparton”), a leading provider of engineered products for the defense industry, today announced that it has entered into a definitive agreement to sell its contract manufacturing unit, Manufacturing & Design Services (“MDS”), to One Equity Partners (“OEP”), a middle market private equity firm.
Following the divesture of the MDS segment, which provides complex electromechanical solutions for a range of industries, Sparton will focus exclusively on its industry-leading engineered defense products business, Engineered Components & Products (“ECP”). Sparton will become a pure-play defense supplier and will continue to design, develop, and produce proprietary engineered products for domestic and foreign defense as well as commercial needs.
With decades of experience in developing engineered products, Sparton has become the partner of choice to the U.S. Navy, allied governments, and leading defense contractors. Sparton will remain a partner in its ERAPSCO joint venture and Bill Toti, currently President & Chief Executive Officer of Sparton ECP, will continue to lead the business under the Sparton brand as Chief Executive Officer of Sparton upon closing.
“This is an important milestone for both our defense products and contract manufacturing businesses, which have operated in separate industries with distinct long-term strategies,” commented Mr. Toti. “Now, these leading platforms will be able to focus on their respective core strengths and capitalize on opportunities specific to each business. We wish our MDS colleagues all the best and look forward to watching their continued success in their next chapter.”
MDS is well-recognized for its historically advanced engineering, design, and manufacture of highly complex electronic and electromechanical devices, including sophisticated printed circuit card assemblies, sub-assemblies, full product assemblies, and cable/wire harnesses. MDS, which nearly doubled its offshore manufacturing capabilities in Vietnam recently and operates nine plants in the United States, has strong multi-year customer relationships with many of the world’s blue-chip OEMs across the aerospace, medical, and industrial markets.
Paul Fraipont, President & Chief Executive Officer of Sparton MDS, added, “We are extremely proud of the robust manufacturing platform we have built over the decades and are excited about our opportunities ahead. MDS has become a trusted partner to many leading businesses around the world, with a strong reputation for delivering high-quality, complex manufacturing solutions. Today’s announcement underscores the strength of our MDS business and our unwavering commitment to providing best-in-class services. We look forward to our partnership with OEP and leveraging their industry expertise as we reach new heights.”
“We look forward to supporting the very talented team at MDS as they continue to meet the strong global demand for advanced manufacturing solutions, while helping them to identify new organic and strategic acquisition opportunities that will drive growth in North America and worldwide,” said Chip Schorr, Senior Managing Director at OEP. “MDS is a fantastic platform, and this transaction is well aligned with OEP’s historic experience in acquiring non-core but high growth potential businesses through corporate carve-outs that position them for their next chapter of growth as an independent company.”
Effective upon closing, the standalone MDS business will rebrand as “Spartronics” and Mr. Fraipont will transition his same role and responsibilities to the new Spartronics business.
Mr. Toti concluded, “Operating our engineered defense products business as Sparton, a standalone entity, we will be able to focus exclusively on providing innovative products and executing on opportunities that drive our platform’s growth. We are excited to build upon our strong foundation and accelerate our ability to meet the critical needs of our customers in the United States and globally.”
The transaction is expected to close during the third quarter of 2020, subject to the satisfaction of regulatory and customary closing conditions. Lincoln International LLC is serving as financial advisor to Sparton and Kirkland & Ellis LLP is serving as Sparton’s legal counsel.
About Sparton Corporation
Sparton, now in its 120th year, is a provider of engineered products for the defense industry and complex contract manufacturing solutions. Sparton’s Engineered Components & Products business designs, develops, and produces proprietary products for domestic and foreign defense as well as commercial needs. Sparton’s Manufacturing & Design Services business provides complex, sophisticated electromechanical solutions for a range of industries. Sparton’s website may be accessed at www.sparton.com.
About One Equity Partners
OEP is a middle-market private equity firm focused on the industrial, healthcare, and technology sectors in North America and Europe. The firm builds market-leading companies by identifying and executing transformative business combinations. OEP is a trusted partner with a differentiated investment process, a broad and senior team, and an established track record generating long-term value for its partners. Since 2001, the firm has completed more than 180 transactions worldwide. OEP, founded in 2001, spun out of JP Morgan in 2015. The firm has offices in New York, Chicago, and Frankfurt. For more information, please visit www.oneequity.com.