KPS Capital Partners has agreed to sell its portfolio company Chassis Brakes International Group to Hitachi Automotive Systems, a subsidiary of publicly traded Hitachi.
Chassis Brakes is one of the world’s three largest manufacturers of automotive foundation brakes and related components. The company’s primary products include brake calipers, disk brakes, drum brakes and parking brakes.
Chassis Brakes operates 12 state-of-the-art manufacturing facilities, as well as 11 engineering centers and sales offices in Europe, Asia, India, North America and South America and has nearly 5,500 employees worldwide. The company, with 2018 revenues of €937 million (approximately $1 billion), is headquartered in Eindhoven, The Netherlands (www.chassisbrakes.com).
KPS purchased Chassis Brakes from The Bosch Group in May 2012 through a complex corporate carve-out transaction. During its ownership term, KPS was very active and spent seven years building a business and technological leader around the acquired Bosch carve-out. “Chassis Brakes exemplifies the KPS investment strategy of seeing value where others do not, buying right and making businesses better, across decades, economic and business cycles, geographies and industries,” said Michael Psaros, a co-founder and managing partner of KPS.
During KPS’s ownership term Chassis Brakes recruited Dr. Thomas Wünsche to the company in February 2015 to become its new Chief Executive Officer. KPS also initiated the construction of four new state-of-the-art foundation brake assembly facilities (in Poland, China, India and Mexico), constructing four new state-of-the-art engineering and R&D centers (in Germany, India, The Netherlands and China), and successfully expanding into the North American automotive market. Under KPS’ ownership, Chassis Brakes invested an aggregate €230 million ($258 million) in R&D and applied engineering, which resulted in commercializing three new products: the “ZOHe” brake caliper, the disc-integrated automated parking brake (“APB-Mi”) and the drum-integrated automated parking brake (“APB-Di”).
Today, as a result of KPS’ efforts, Chassis Brakes is a global business with an industry-leading technological portfolio of products and the capability to supply substantially all of the world’s global automotive companies. According to a source familiar with this transaction, the sale price for Chassis Brakes was €690 million ($774 million) and provided KPS with a 6x return on its investment.
“We are proud of Chassis Brakes’ extraordinary transformation under our ownership,” added Mr. Psaros. “Chassis Brakes demonstrates our ability to build industry-leading manufacturing companies on a global basis. The company’s success is a result of KPS’ investment in R&D, application engineering, innovative new technologies and products, new manufacturing facilities and our people. We congratulate and thank Dr. Wünsche and the company’s senior management team for their strategic vision and brilliant execution, and our employees worldwide for their passion for excellence.”
“Working in partnership with KPS, Chassis Brakes became a far better business by investing significantly in our operations, products, technology and people,” said Dr. Wünsche. “We thank KPS for providing our team with the expertise, capital and resources needed to grow our business and to further our culture of innovation and continuous improvement. We are very excited about Chassis Brakes’ future under Hitachi Automotive’s ownership.”
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).
Tokyo-based Hitachi Automotive Systems, a subsidiary of Hitachi (TSE/TYO: 6501), manufactures automotive and transportation components and systems including engine powertrain systems, electric powertrain systems and integrated vehicle control systems. Click HERE for the company’s website.
Citigroup Global Markets was the financial advisor to KPS and Chassis Brakes.
The buy of Chassis Brakes by Hitachi Automotive Systems is expected to close by the end of 2019.
© 2019 Private Equity Professional | June 19, 2019