Wynnchurch Carves Two Forges from ATI

Wynnchurch Capital has acquired two closed-die forging facilities from publicly traded Allegheny Technologies for $37 million in cash.

The acquired closed-die operations are located in Portland, IN and Lebanon, KY and were part of Allegheny Technologies’ High Performance Materials & Components (HPMC) unit. This unit produces materials made from titanium, nickel- and cobalt-based alloys and superalloys, zirconium and other specialty metals, in long product forms such as ingot, billet, bar, rods, seamless tubes, and as forgings and castings, and machined parts.

“This transaction is consistent with our ongoing efforts to actively evaluate our business portfolio to ensure we’re focused on key growth opportunities for HPMC in the aerospace & defense end-markets, specifically in nickel and titanium products as well as in advanced iso-thermal and hot-die forgings,” said John Sims, executive vice president of HPMC. “With the sale to Wynnchurch Capital, these solidly-performing, independent operations will become part of a company with a proven track record of investing in, growing and successfully operating industrial manufacturing businesses.”

The Portland and Lebanon closed-die forging facilities produce carbon and alloy steel forged products for blue-chip OEMs primarily in the oil & gas, transportation and construction & mining industries. Closed-die forging (also referred to as impression forging) is a process in which dies move toward each other and cover the workpiece in whole or in part. The heated raw material, which is approximately the shape of the final forged part, fills the enclosed die impression. The production capabilities of the Portland and Lebanon facilities are complemented by in-house design and engineering, material expertise, product machining and heat-treating services. Sales from these two forging facilities in 2018 were $86 million.

“The business has built a track record of delivering quality and reliable forging solutions to its blue-chip customer base.  Through the partnership with Wynnchurch, we believe there is potential to leverage that reputation and unlock significant growth in the business,” said Paul Ciolino, an operating partner at Wynnchurch.

“The Portland and Lebanon operations are well-positioned businesses that have provided customized products to their customers for decades,” said Greg Gleason, a managing director at Wynnchurch. “We look forward to partnering with management and the company’s dedicated employees.”

Wynnchurch makes investments in middle-market companies that have revenues of $50 million to $1 billion. Sectors of interest include aerospace & defense, automotive, building products, chemicals, food, logistics, energy services & equipment, environmental services, industrial products & services, metals & mining, and paper & packaging. The firm is actively investing from its $1.3 billion fourth fund which closed in November 2014. Wynnchurch was founded in 1999 and is located in the Chicago suburb of Rosemont with additional offices in Los Angeles (El Segundo), and Toronto (www.wynnchurch.com).

“We are excited to complete another corporate carve-out with the potential for significant value creation and the opportunity to grow the platform,” said Chris O’Brien, a managing partner at Wynnchurch.

Allegheny Technologies (NYSE: ATI) is a maker of a range of specialty metal products used in aerospace and defense (particularly commercial jet engines), oil & gas, chemicals, energy, and medical sectors. The company has annual revenues of $4 billion and is headquartered in Pittsburgh (www.atimetals.com).

This transaction is expected to close by the end of June.

© 2019 Private Equity Professional | June 3, 2019

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