New Flyer Industries Inc. (TSX: NFI) is paying $480 million to buy Motor Coach Industries Inc. (MCI) from New York private equity firm KPS Capital Partners LP.

Des Plaines, Illinois-based MCI manufactures coach busses, including tour, charter, line-haul, commuter and transit vehicles for the U.S. and Canada. The company has a strategic partnership with Daimler AG, and has exclusive distribution rights for Setra motor coaches and aftermarket parts.

MCI has manufacturing facilities in Winnipeg, Manitoba, and Pembina, North Dakota, plus a parts distribution center in Louisville, Kentucky, and six service centers in North America.

The target has a long history of restructuring. After filing for bankruptcy protection at the height of the financial crisis in 2008, MCI's creditors took over. But the business still struggled, and when KPS came on board in 2010, MCI was generating negative $12 million in Ebitda, according to a source familiar with the situation. Today, the company is generating $75 million in Ebitda, according to the source.

After buying MCI in an all-equity deal, KPS brought in a new management team, restructured underperforming business units and changed the business' product mix. KPS also orchestrated the Daimler partnership, in 2012.

Winnipeg-based New Flyer also manufactures busses, and was at one point backed by KPS, which exited the business in a 2004 sale to Harvest Partners. 

The automotive sector has hosted a large volume of M&A activity in recent years, as sales of new and used cars have risen globally. In October, Bridgestone Corp. agreed to buy Pep Boys (NYSE: PBY), a car service chain.

 Earlier in November, Shipston Equity Holdings LLC agreed to buy auto parts maker Compass Automotive Group LLC from Monomoy Capital Partners, and before that, in September, Holley Performance Products picked up MSDP Group LLC from Z Capital Partners.

Manufacturing industry Restructuring