KPS Capital Partners has signed an agreement to sell its portfolio company Waupaca Foundry to Hitachi Metals for $1.3 billion in cash. Completion of the transaction is expected during the fourth quarter.
Waupaca Foundry, with annual sales of approximately $1.7 billion, is the largest iron foundry company in the world and produces gray and ductile iron castings using state-of-the-art technology. Waupaca supplies iron castings to the automotive, commercial vehicle, agriculture, construction and industrial markets. The company operates six manufacturing facilities located in Wisconsin (4), Indiana, and Tennessee. Waupaca employs approximately 3,900 people and is headquartered in Waupaca, WI (www.waupacafoundry.com).
“The success of our investment in Waupaca demonstrates KPS’ ability to see value where others do not, to buy right and to make businesses better,” said David Shapiro, a Managing Partner of KPS. “In 2012, we recognized the transformation of the North American iron foundry market and the unrivaled importance of Waupaca to its customers and the end markets that it serves. The sale of Waupaca to Hitachi Metals, a leading multinational corporation, is a great outcome for our investors, Waupaca, its management, employees and customers.
KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with $6 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. The KPS investment strategy targets manufacturing and industrial companies with strong market positions that are going through a period of transition or experiencing operating or financial difficulties. The firm’s portfolio companies have aggregate annual revenues of approximately $8.1 billion, operate 109 manufacturing plants in 26 countries, and employ over 51,000 associates worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).
“KPS worked with management to improve every aspect of Waupaca’s business, resulting in profitability increasing by more than 40% in just over two years. The investment return generated for our investors in the Waupaca transaction is further validation of the KPS investment strategy, which we have successfully executed over many years and across numerous economic cycles,” said Mr. Shapiro.
“KPS recognized the potential of our business two years ago. Working in partnership with KPS, we invested significantly in our operations and people, which included an expansion of our production capacity and launching numerous continuous improvement initiatives across all six of our foundries,” said Gary Gigante, Chief Executive Officer of Waupaca. “We are very grateful to KPS for its leadership and its commitment to improving and growing our business.”
Hitachi Metals manufactures and markets high-grade metal products and materials, magnetic materials and applications, high-grade functional components and equipment, wires, cables, and related products. The company is based in Tokyo (www.hitachi-metals.co.jp/e/).
“We are very proud to have had the opportunity to partner with Gary Gigante, his management team and all the dedicated employees of Waupaca. The material value created for our investors since 2012 is the result of their collective effort, for which we are very grateful. We are confident that Waupaca will continue to grow and prosper in the future as part of Hitachi Metals,” Mr. Shapiro concluded.
2014 PEPD • Private Equity’s Leading News Magazine • 8-19-14
