Publicly-traded Methode Electronics has agreed to acquire Grakon from Industrial Growth Partners for $420 million.
Grakon is a designer and developer of lighting and electronics systems for OEMs in the heavy truck, specialty vehicle, bus, powersports and rail end markets. The company’s top ten commercial vehicle customers have an average tenure of over 19 years, with its newest customer being Tesla.
Grakon has engineering and manufacturing operations near Detroit in Farmington Hills, MI; and in the Netherlands, China, United Kingdom and Canada. Grakon has over 1,200 employees and is headquartered in Seattle (www.grakon.com).
For the trailing 12 months as of July 31, 2018, Grakon’s revenue was approximately $159 million and EBITDA was approximately $41 million. Based on the purchase price of $420 million, this results in an EBITDA valuation multiple of 10.2x.
Industrial Growth Partners (IGP) acquired Grakon in October 2014. During its ownership term, Grakon completed two add-on acquisitions with the May 2016 buy of Toronto-based Hamsar Diversco, a provider of lighting and electronic products used in the bus, off-road/powersports, industrial equipment and heavy truck segments; and the October 2016 buy of Manchester, UK-based BMAC Limited, a provider of LED lighting and electronic control systems for the European rail, bus and tram markets.
San Francisco-based IGP invests in niche manufacturers and industrial services businesses that have histories of profitability and revenues of up to $250 million (www.igpequity.com).
Methode (NYSE: MEI) designs, manufactures and markets electronic and electro-mechanical devices used in a range of industries including automotive, aerospace, appliance, material handling, medical, military, mining, and telecommunications. The company, with revenues of $908 million in FY2018, was founded in 1946 and is headquartered in Chicago (www.methode.com).
Methode will the fund the total consideration of $420 million with a combination of cash on hand and committed debt financing.
Baird was the financial advisor to Grakon on this transaction and Kirkland & Ellis provided legal services.
The transaction is expected to be completed in September 2018.
© 2018 Private Equity Professional | August 23, 2018
