Flanders Holdings, a portfolio company of Insight Equity since May 2012, has agreed to be acquired by American Air Filter Company, the US subsidiary of Osaka-based Daikin Industries, for $430 million. Last year, Flanders had revenues of approximately $300 million. The acquisition is expected to close before the end of April 2016.
Flanders is a designer, manufacturer and seller of air filters that are used in residential heating, air conditioning, and air cleaning (HVAC) applications. The company also supplies HVAC filters used in commercial heating, ventilation and air conditioning systems, semiconductor manufacturing, biotechnology, pharmaceuticals, food processing, nuclear power and nuclear materials processing. Flanders, founded in 1950, operates seven manufacturing facilities and is headquartered about 80 miles east of Raleigh in Washington, NC (www.flanderscorp.com).
In March 2015, Flanders completed the add-on acquisition of Pronamic Industries, a manufacturer, seller and distributor of fiberglass media and materials for use in air filtration systems. The company was founded in 2013 and is also headquartered in Washington, NC (www.pronamicindustries.com). This was the only add-on acquisition completed by Flanders during its ownership by Insight.
Upon closing of the Daikin acquisition, the Flanders business will be integrated into the operations of American Air Filter. According to Daikin, this will make American Air Filter the leading manufacturer of air filters in the United States which is reportedly the largest air filter market in the world.
Air filters are used to remove objects, particles, dust, and pollutants from the air and clean it. Not only do filters clean the air in living spaces, but they also perform the task of preserving human safety by preventing the release of hazardous substances in factories. Air filters maintain the air environments in places such as factory cleanrooms used for metalworking and semiconductors that require a high quality of purity, and they reduce the possibility of contamination from the introduction of impurities.
Daikin Industries (TSE:TYO), the buyer of Flanders, is a large manufacturer of air conditioner products and fluorochemicals, including refrigerants, that are used in homes, offices and industrial facilities. The company has more than 70 production facilities and approximately 59,000 employees worldwide. Daikin was founded in 1924 and is headquartered in Osaka (www.daikin.com).
Insight Equity makes control investments in middle market, asset intensive companies across a range of industries and specializes in partnering with companies in complex and challenging situations, including corporate divestitures, aggressive growth opportunities, restructurings, and transitions from private family ownership. The firm is based near Dallas in Southlake, TX and also has an office in New York (www.insightequity.com).
© 2016 Private Equity Professional • 2-10-16
