Publicly traded Kaman, a diversified aerospace and industrial company, has agreed to be acquired by Arcline Investment Management in an all-cash transaction at an enterprise value of $1.8 billion.
Kaman’s aerospace segment manufactures and provides helicopter, fixed wing, and UAV products including landing gear struts, wheels, and brakes; rotor blades; precision ball bearings; actuators and control systems for flight control surfaces and landing gears; fuselage, wing and tail components; and hydraulic and pneumatic hoses, tubing, and connectors. The aerospace segment also provides maintenance, repair, and overhaul (MRO) services for military and commercial aircraft.
Within its industrial segment, Kaman provides motion control products including sensors, controls, and motion control systems; connectors, switches, and sensors; conveyors, hoists, and lifting equipment; and pumps, valves, and actuators.
Kaman was founded in 1945 by aviation pioneer Charles Kaman and during its first ten years the company operated exclusively as a designer and manufacturer of helicopters that set records in performance and altitude and achieved many other aviation firsts. In 1956, Kaman began to diversify as an aerospace subcontractor with customers that included McDonnell Douglas, Grumman, and others. Today, the company is headquartered near Hartford in Bloomfield, Connecticut.
TTM financial results for Kaman through September 30, 2023, were $769 million in revenues and $112 million in EBITDA. Based on the $1.8 billion purchase price this equates to an EBITDA valuation multiple of 16x.
“Following robust engagement with Arcline and careful evaluation of other potential value creation opportunities, we are pleased to have reached this agreement,” said Ian Walsh, the chairman, president and chief executive officer of Kanan. “Given the rigorous review of alternatives we recently completed, we are confident this transaction maximizes value for shareholders and is in the best interest of Kaman as well as our employees, customers and other stakeholders.”
“We have tremendous respect and admiration for Kaman’s team, history, and its portfolio of brands,” said Arcline in a released statement. “Kaman has long been a trusted solutions provider of engineered components and subsystems to mission-critical markets, and we believe the company is in a strong position to grow and benefit from attractive tailwinds. We look forward to working closely with Ian and the rest of the talented Kaman team to drive further growth through accelerated investments in both new product development and strategic acquisitions.”
Arcline makes control investments in companies with recurring revenue business models in the defense and aerospace; infrastructure services; industrial and medical technology; life sciences and specialty materials sectors. The firm’s targets will typically have from $10 million to $100 million of EBITDA and enterprise values up to $1 billion. The firm closed its third fund in March 2023 with total capital commitments of $4.5 billion. Arcline’s earlier fund closed in January 2021 with $2.75 billion of capital commitments.
Arcline will fund the buy of Kaman with a combination of committed debt and equity financing and the transaction is not subject to a financing condition. .
J.P. Morgan Securities is the financial advisor to Kaman and Morgan Stanley is advising Arcline.
The sale of Kaman is expected to close during the first half of 2024.
© 2024 Private Equity Professional | January 24, 2024
