Montage Partners has sold Southwest Data Products, a maker of cabinets and enclosures used to house and protect computer networking equipment, to publicly traded Nucor for $115 million.
Southwest Data Products (SWDP) designs, manufactures and installs data center cabinets, cages, and racks; hot/cold airflow containment systems; cable pathway support structures; and modular units (POD structures) that house servers, storage devices, and networking gear within a data center facility.
SWDP also provides white-space construction services to hyper-scale technology-based companies, and co-location data center operators. White-space construction refers to the development and repurposing of spaces within existing technology infrastructure and data centers. San Bernardino, California-headquartered SWDP, with 147 employees, was founded in 1986 and is led by CEO and founder Martin Ament, CFO Nicholas DeMonte, and EVP Jesse Brodhagen.
Montage Partners invested in SWDP in April 2017 in partnership with Mr. Ament. “My story prior to partnering with Montage probably sounds familiar to many founders: I was wearing many hats and working most nights and weekends; growing the company but knowing there was so much more green grass to go for,” said Mr. Ament. “I chose Montage because of their partnership approach and proven track record in helping companies scale, and it was absolutely the right choice for me and my company. I am thrilled to be able to build on that success with the Nucor team.”
During Montage’s seven-year investment term, SWDP grew its revenues by 5x. During this time, the company expanded into three new products lines (cage, containment, and POD structures), streamlined manufacturing through process flow optimization, developed the in-house capability to install products for customers, and expanded its number of team members by 80%.
“We’re thrilled for Martin, Nick, Jesse, and the entire SWDP team as the company joins the Nucor family,” said Jordan Tate, a co-managing partner at Montage. “Our partnership with SWDP embodies what we love to do: invest in successful, founder-led companies looking to scale significantly, leveraging our resources and the Montage Partners ecosystem to accelerate growth. SWDP is positioned for a bright future, and we look forward to following the team’s continued success in the years ahead.”
With the acquisition of SWDP, Nucor has formed Nucor Data Systems, a new business unit that will serve the data center infrastructure industry. This new unit will provide Nucor’s existing Warehouse Systems businesses with expanded capabilities in airflow containment structures, as well as new product capabilities that include manufacturing cabinets, enclosures, and caging for data centers and installation services. Another synergy of the transaction is that SWDP uses many types of steel as raw material that can now be provided by Nucor facilities, including sheet steel, steel tubing and wire mesh.
“We are excited to add SWDP and new teammates to our Nucor family of companies. This acquisition will give us new capabilities to serve a rapidly growing market and will bolster Nucor as a preferred supplier to many of the nation’s largest and most innovative hyperscale cloud and colocation data center operators,” said Chad Utermark, executive vice president of new markets and innovation at Nucor. “The SWDP acquisition furthers our expand beyond strategy to invest in steel centric businesses that operate outside of the cyclical nature of steel production.”
Charlotte-based Nucor (NYSE: NUE) is the largest steel producer in the United States, the largest recycler of scrap in North America, and the 16th-largest steel producer in the world. In 2023 the company had revenues of more than $34 billion and more than 32,000 employees.
Montage Partners invests in North America-based companies with EBITDA between $1.5 million and $7 million that are active in the business services, consumer, healthcare, industrial and technology sectors. The firm, with offices in Scottsdale, Arizona and Salt Lake City, Utah, was founded in 2004 and is led by managing partners Jordan Tate and Rob Wolfman.
Lincoln International was the financial advisor to SWDP on this transaction.
© 2024 Private Equity Professional | April 2, 2024
