Stanley Black & Decker Targets Infrastructure
Tool giant will continue to build out its five platforms
July 30, 2010
Stanley Black & Decker acquired CRC-Evans from Natural Gas Partners for $445 million in cash, which translates into a valuation slightly below 7.5x the target's Ebitda.
The CRC addition will be instantaneously accretive to Stanley Black & Decker. The acquisition will be financed with the company’s existing sources of liquidity and will not increase the company’s year-end debt levels.
In November 2009, Stanley Works and Black & Decker agreed to join forces in a $4 billion all-stock deal merger. The merger was completed in March with Black & Decker owning 49.5% of the combined company.
Analysts at Janney Capital Markets, in a research note found on Thomson One Analytics, wrote that CRC will serve as the base acquisition for the company's fledgling infrastructure platform. The legacy hydraulics business will also be a part of infrastructure unit. The analysts stated that CRC is a well established global company with 26% of its sales coming from Europe, the Middle East and Africa, while Russia and Asia account for 21% and 11% of revenue, respectively.
CRC-Evans is a full-line supplier of equipment and services used in the construction of large diameter oil & gas transmission pipelines. NGP acquired the company in 2003 for an undisclosed sum. A source familiar with the company said management increased the value of the CRC more than tenfold over the course of seven years.
CRC generated $353 million in revenue and $102 million of Ebitda for 2009, but saw its revenue fall by nearly $100 million in fiscal 2010. The source said that despite the pullback, NGP's return on the exit was still "very good."
NGP invested in CRC out of its seventh fund, which is now in harvest mode, according to the source. The firm, which was founded in 1988, is currently deploying its 2008-vintage ninth fund, which has $4 billion of capital under management. Natural Gas Partners, as its name implies, primarily targets upstream and midstream investments within the power and gas space.
David Kurzweil, from Latham Watkins, served as the lead legal counsel to NGP on the transaction with Stanley Black & Decker. JP Morgan and EuroConsult were financial advisors to the buyer.
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