Private equity company Trive Capital has acquired Huron Inc., a Lexington, Mich.-based maker of tubular assemblies and precision machined products for the automotive industry, from SunTx Capital Partners.
Financial terms of the deal were not disclosed, but SunTx received over eight times multiple with the deal. For its part, Dallas-based Trive tends to spend up to $40 million on equity investments, according to its website. This is the third acquisition for Trive since it was launched in October 2012.
The deal comes after several cost-cutting initiatives implemented by SunTx since it acquired Huron in 2005 — just ahead of when many original equipment manufacturers (OEMs) went bankrupt due to the high-cost of raw materials.
Major car makers, including Ford Motor Co. (NYSE: F), GM Co. (NYSE: GM) and Chrysler started to produce fewer vehicles and spend much less on supplies. “Revenues declined over that period, but margins were increasing,” says Ned Fleming, founder and managing partner of SunTx.
Unlike many other OEMs during that time, Huron avoided bankruptcy. Certain steps taken by management and SunTX, such as reducing overhead, closing one of its two manufacturing plants in Michigan, and taking on another major customer, Toyota Motor Co. (NYSE: TM), helped prepare the company for the industry downturn that followed. Previously, Ford was Huron’s only customer.
Donnelly Penman & Partners served as financial adviser to Trive, while Patton Boggs LLP served as legal counsel. SunTx tapped Donnelly Penman & Partners to be financial adviser and law firm Haynes and Boone LLP to handle legal matters.
For more coverage on the automotive sector, see "Autoparts Consolidation Continues as Trio Merges," “Winners of the Auto Aftermarket," “Ford Auto Parts at Heart of Baird-backed Eckler’s Deal,” and “The Buyside: Fras-le On the Hunt.”