KPS Capital Partners has signed an agreement to acquire Howden from publicly traded Colfax Corporation for $1.8 billion.
Howden is a manufacturer of fans, compressors, heat exchangers, steam turbines, and other air and gas handling equipment used in the industrial, power, oil & gas, and mining industries. The company also provides post-sale services including spare parts, ongoing maintenance, and periodic improvements and upgrades.
“We are thrilled to have the opportunity to own and support Howden as the company continues its path of transformation and growth,” said Raquel Palmer, co-managing partner of KPS. “Howden is a formidable company that benefits from many positive secular trends, including increasingly greater environmental standards, the need for energy conservation and the trend toward urbanization, especially in developing economies.
Howden was founded in 1854 by James Howden to design and supply boilers and steam engines for the marine industry. Colfax acquired Howden as part of its January 2012 acquisition of Dublin, Ireland-based Charter International. Today, Howden is headquartered in Glasgow, Scotland and has over 5,300 employees and 22 manufacturing facilities in 12 countries (www.howden.com).
In 2018, Howden had revenues of $1.5 billion and a gross profit of $403 million. According to Colfax, for the twelve months through March 2019 Howden had approximately $90 million of operating profit and $200 million of adjusted EBITDA. With a purchase price of $1.8 billion this would result in an adjusted EBITDA valuation multiple of 9x.
“Howden enjoys a leading market position, scale, a global manufacturing footprint, world-class design and engineering capabilities, and a portfolio of industry-leading products,” added Ms. Palmer. “We intend to capitalize on the company’s many attractive growth opportunities, including strategic acquisitions, and to support its already substantial investment in research and development, technology and new product development. We look forward to partnering with Howden’s talented management team to achieve success as an independent company.”
“We are excited about our future as an independent company under KPS’ ownership,” said Ian Brander, chief executive officer of Howden. “KPS is an ideal partner, given its demonstrated track record of recognizing and growing world-class industrial companies. KPS’ commitment to continuous improvement, its global network, access to capital and significant resources will enable us to continue to grow our business and provide our customers with market-leading products and solutions.”
KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with approximately $5 billion of assets under management. KPS makes control investments in manufacturing and industrial companies across a range of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing. The firm’s portfolio companies have aggregate annual revenues of approximately $5.8 billion, operate 100 manufacturing plants in 27 countries, and employ over 22,000 people worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).
Colfax Corporation (NYSE: CFX), the seller of Howden, is a manufacturer of welding, air and gas handling equipment, and medical devices. In February 2019 Colfax acquired medical device maker DJO Global from Blackstone for $3.1 billion. Proceeds from the sale of Howden will be used to pay down debt used for this transaction. Colfax is led by CEO Matt Trerotola and is headquartered near Baltimore in Annapolis Junction, MD (www.colfaxcorp.com).
J.P. Morgan Securities and RBC Capital Markets were the financial advisors to KPS and Goldman Sachs & Co. is the lead financial advisor to Colfax.
Completion of this transaction is expected to occur in the second half of 2019.
© 2019 Private Equity Professional | May 16, 2019