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ACG New York Women of Leadership - Entrepreneur Series
Barbara Bradley Baekgaard, founder of Vera Bradley (Nasdaq: VRA), is the latest in a series of entrepreneurs highlighted at ACG New York Women of Leadership events. Photo credit: Robert Blumenfeld

Watercooler

GTCR, Hormel, the Riverside Co-CEOs and Others Win M&A Mid-Market Awards
Amid a slow and challenging year for dealmaking, the winners of Mergers & Acquisitions’ 7th Annual M&A Mid-Market Awards outpaced the competition to grow, innovate and lead the middle market

Roundtable

Financial Services Companies Heat Up M&A Market
Speakers from Flexpoint Ford, Genstar Capital, Baird Capital, Madison Capital Funding and Katten Muchin Rosenman discuss the various factors playing a role in M&A activity within the financial services space

Expert's Corner

Pursuing Pharma Manufacturing
The fragmented pharmaceutical manufacturing industry provides plenty of opportunities for private equity investors, says JLL Partners founder Paul Levy

Auto Parts Consolidation Continues as Trio Merges

Omega Environmental scoops up two companies from GTC

Consolidation in the car parts space continues to speed along, with Omega Environmental Technologies' acquiring the two businesses that make up Global Temperature Control LLC (GTC).

GTC agreed to sell Global Parts Distributors and Santech Industries to Omega, a distributor and manufacturer of parts for car air-conditioners and radiators, for an undisclosed price. The deal brings the two GTC companies under the ownership of Omega, which is majority owned by private equity firm River Associates Investments LLC.

Global Parts is based in Macon, Ga., while Santech, which GTC acquired in June, operates out of Fort Worth, Texas.

River Associates, based in Chattanooga, Tenn., invested in of Irving, Texas-based Omega out of its sixth fund, RAI VI, which closed earlier this year with about $222 million in capital commitments.

GTC, a portfolio company of Austin, Texas-based Owner Resource Group, manufactured air-conditioners for the automotive aftermarket under both the Global Parts and Santech brands. Under River Associates, each brand will continue to operate independently, but maintain synergies in order to facilitate growth, says Global Parts president Davey Montford.

“We would love to expand internationally,” he tells Mergers & Acquisitions, citing Omega’s exporting capability, which includes customers in over 85 countries. By contrast, Global Parts and Santech ship products just within the U.S. and Canada. “It made sense,” he adds, with hopes of Omega spreading some of its cross-border wealth.

Bankers Patrick Hanraty, David Allebach and Alex Chadwick of Harris Williams & Co.’s Philadelphia office ran the sale process. The transaction closed on Dec. 3.

The merger underscores the heightened deal activity in the automotive aftermarket, which has become a darling of PE firms ever since the economy tanked in 2008. Since then, car owners have opted to keep their vehicles longer rather than buy new cars, thus increasing the market for parts made by third parties.

More deals are on the horizon. General Parts International Inc. is rumored to be selling two of its businesses, Carquest Auto Parts and World Wide Parts and Accessories Corp. (known as Worldpac). Reported bidders for Carquest include PE firms Kohlberg Kravis Roberts & Co. (NYSE: KKR) and Leonard Green & Partners LP, as well as strategic buyer Advance Auto Parts.

Among the deals that are still pending include the Carlyle Group’s (Nasdaq: CG) buying of DuPont Performance Coatings from E.I. du Pont de

Nemours and Co. (NYSE: DD) for $5.2 billion, and Halla Climate Control Corp.’s (KOSE: A018880) purchasing the climate control operations of Visteon Corp. (NYSE:VC). Both transactions are scheduled to be completed during the first quarter of 2013. Then there’s Robert Bosch GmbH, which offered to acquire Service Solutions business from SPX Corp. (NYSE: SPW) for $1.2 billion in cash. The deal represents a multiple of 12.7 times Ebitda.

Not only are buyers in the sector pursuing these sought-after companies, they are also paying more. According to a recent BB&T Capital Markets report, Ebitda multiples for auto-aftermarket companies increased from 7.8 times in January to 8.5 times, as of Nov. 27.

For more of our on-going coverage of the sector, see “Winners of the Auto Aftermarket," “Ford Auto Parts at Heart of Baird-backed Eckler’s Deal,” and “The Buyside: Fras-le On the Hunt.”

 

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