Blackstone Group LP, the world’s largest buyout firm, reached an agreement to acquire industrial- products maker Gates Global Inc. from Onex Corp. and Canada Pension Plan Investment Board for $5.4 billion, according to a person with direct knowledge of the matter.

The deal will be announced as soon as today, said the person, who requested anonymity because discussions are private. The buyout would be Blackstone’s biggest private-equity deal since taking over Hilton Worldwide Holdings Inc. seven years ago.

Christine Anderson, a spokeswoman for Blackstone, declined to comment on a potential deal agreement, which was reported earlier today by the Wall Street Journal. Officials for Onex, Canada Pension Plan Investment Board and Gates didn’t immediately respond to requests for comment.

Blackstone’s dealmaking has been stagnant as rallying stock markets in 2013 led to high prices that the firm chose to pass on. Its private-equity group deployed $5 billion from its funds last year, the same as in 2012, as New York-based Blackstone kept “getting outbid,” President Tony James said in a January earnings call.

Blackstone would be paying 9.6 times Gates’s adjusted earnings before interest, taxes, depreciation and amortization in the year ended September if the agreement is for $5.4 billion. The median multiple for deals over $250 million has ranged from 9 times to 11 times each quarter in 2012 and 2013, according to PitchBook Data Inc., a Seattle-based research firm.


IPO Filing


Gates, based in Denver, filed in December for an initial public offering. The company, which makes power transmission belts, fluid hoses and other industrial equipment, is owned by Canadian buyout firm Onex and Canada Pension Plan Investment Board, which pursued a dual-track exit of their investment by exploring both an IPO and a sale. The company, led by Chief Executive Officer Jim Nicol, posted sales of about $2.9 billion for the year through September, according to the IPO registration statement filed with U.S. regulators.

Gates was acquired in 1996 by London-based Tomkins Ltd., which was purchased 14 years later for about $4.5 billion by Onex and Canada Pension Plan. Onex took a 56 percent stake and Canada Pension Plan a 42 percent interest.

Gates sells products to customers including Deere & Co., Daimler AG and Bombardier Inc., with North America accounting for half its sales, according to the filing with the U.S. Securities and Exchange Commission.

Private-equity deals globally stand at $164.8 billion this year through April 3, a 48 percent increase from the same period last year, according to data compiled by Bloomberg.

Blackstone acquired Hilton in 2007 for $26 billion, a transaction completed by the firm’s private-equity and real estate units. The firm’s real estate funds purchased Centro Properties Group’s U.S. shopping centers for $9.4 billion in 2011.


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