Transom Capital Group has sold its portfolio company American Driveline Systems (ADS) to publicly-traded Icahn Enterprises. Transom Capital acquired ADS in December 2016 from American Capital.
American Driveline Systems is the franchisor of AAMCO and Cottman Transmission & Total Auto Care brands. According to Transom, AAMCO and Cottman are the #1 and #2 transmission repair retail chains in North America, respectively, with approximately 680 locations in the US and Canada. The company was founded in 1963 and is headquartered near Philadelphia in Horsham, PA (www.aamco.com) (www.cottman.com).
“Our goal, when we acquired ADS, was to position the company for long term growth,” said Ken Firtel, Managing Partner, Transom Capital Group. “Through our collective efforts we were able to resolve obstacles to growth, and in doing so, position the company for even greater future success. In addition, we have found a perfect acquirer of the business in Icahn Enterprises, whose strengths are a near perfect complement to ADS’ and will most surely help to usher in the next wave of growth at the company.”
Icahn Enterprises (NASDAQ: IEP) is a diversified holding company engaged in ten primary business segments: investment, automotive, energy, gaming, railcar, mining, food packaging, metals, real estate and home fashion. Icahn Automotive Group was formed by Icahn Enterprises to invest in and operate businesses involved in aftermarket parts distribution and service. The businesses of Icahn Automotive Group include Pep Boys, an automotive aftermarket retail and service chain; Auto Plus, an automotive aftermarket parts distributor; Just Brakes, an automotive service chain; and Precision Tune Auto Care, a network of owned and franchised automotive service centers. With the addition of ADS, Icahn Automotive now operates approximately 1,900 owned and franchised service locations in 49 states plus Puerto Rico, the District of Columbia, and several other international locations.
“From the outset, Transom Capital’s ownership team showed their dedication and ability to look strategically at our business and help us execute a plan to reach our full potential,” said ADS CEO Jim Gregory. “The Transom Capital team was always there for us to provide insight and guidance, but also allowed us the freedom to drive performance on a daily basis. As we look forward to a bright future with Icahn Enterprises, we are grateful for the relationship and success we had with Transom Capital.”
Transom Capital Group invests in buyouts and turnarounds of companies with EBITDAs from $0 (turnaround situations) to $20 million. Sectors of interest include consumer products, media & entertainment, and industrial. Transom held a final closing of Transom Capital Fund II LP with $133 million of limited partner commitments in June 2016. The new fund was oversubscribed and closed above target. Transom is headquartered in Los Angeles with an additional office in Seattle (www.transomcapital.com).
“Icahn Automotive Group continues to pursue an aggressive strategy of strengthening our full-service automotive repair capabilities, with the ability to leverage a broad national footprint and what we believe will be the most efficient operating model in the industry,” said Daniel Ninivaggi, CEO of Icahn Automotive Group. “We are excited to work with the ADS management team as well as the AAMCO and Cottman franchisees to capitalize on the many growth opportunities we see ahead.”
“The acquisition of American Driveline Systems is the next step in building out our national automotive service network,” said Carl Icahn, Chairman of Icahn Enterprises. “I believe that the automotive aftermarket service industry is undergoing secular change driven by increased vehicle complexity, advances in technology, as well as the growth of automotive fleets, including ride-sharing and car-sharing networks. These changes will continue to offer, in my opinion, extremely attractive and unique investment opportunities. With our presence throughout the automotive aftermarket value chain, Icahn Enterprises is positioned to capitalize on these trends.”
Icahn Enterprises also owns Federal-Mogul Motorparts, a supplier of both original equipment and vehicle aftermarket products including ANCO wipers; Beck/Arnley parts and fluids; Champion lighting, spark plugs, wipers and filters; and MOOG chassis components.
O’Melveny & Myers acted as M&A counsel and Greenberg Traurig acted as debt counsel for Transom Capital and ADS on the transaction.
© 2017 Private Equity Professional | October 9, 2017
