In the year 2000, GPs rolled the windows down, turned the radio up and let the wind blow through their hair. In other words, it was a good year for automobile-related private equity deals – both on the buy side and the sell side.
According to Buyouts data, nearly $4 billion went to the buyouts of automotive-related companies. This number does not include commitments to all transportation-related companies, strictly those involving cars or car parts.
A few of the transactions include the joint effort by William Blair Capital Partners, Wind Point Partners and Norwest Equity Partners to purchase Penda Corp. from Trivest; MapleWood Partners’ acquisition of Parts Depot Inc for $40 million; Joseph, Littlejohn & Levy’s sale of General Trailers to Apax Partners; and, making the biggest splash, Heartland Industrial Partners’ $2.2 billion buyout of MascoTech and the subsequent Simpson Industries add-on for $350 million.
Furthermore, Greenbriar Equity Group came to market early in 2000 with its debut $400 million fund that will focus on transportation and transportation-related companies. Berkshire Partners committed $200 million to the novel effort and pledged to co-invest on every deal.
The Affairs to Remember
Several automotive-related deals stood out from the rest of those completed in 2000.
After six years of ownership, Miami-based Trivest released its hold on Penda Corp., which makes pick-up truck accessories, gaining five times its original investment on the April sale.
Although Trivest was pleased with Penda’s progress, the firm had exhausted the resources set aside for the company, said Managing Director Troy Templeton.
Selling to investors with similar game-plans would allow Penda to continue on the same path, but with more capital for growth and acquisitions, he added.
Therefore, William Blair, Wind Point and Norwest acquired the company, agreeing to grow it through product line development.
Penda’s growth potential was obvious to its new owners because of on-going increased interest from consumers in the light truck market that began in the mid 1990s with the beginning of the sports utility vehicle craze. Also, pick-up trucks are becoming a more acceptable vehicle for the average family, selling at lower costs and having more versatility than sedans (manufacturers are adding back seats, back doors and a more car-like interior).
Ringing in as the largest buyout of 2000, Heartland purchased MascoTech for $2.2 billion in August. One of the company’s main operations is manufacturing metal for the automotive industry.
CSFB Private Equity also contributed to the deal.
“This was a great opportunity because the automotive sector on the supplier side is consolidating,” Hartley Rogers, a CSFB’s co-head of private equity said. “The metal forming business, which is primarily for parts that go in engines and drive trains is still very fragmented and MascoTech is one of the largest companies that operates in the sector.”
Just three months after this mega-buyout, Heartland agreed to purchase Simpson Industries, a Nasdaq-traded auto parts manufacturer, for approximately $350 million. The deal closed in the fourth quarter and was merged into MascoTech.
Simpson is one of the two biggest machining companies in North America, said Dan Tredwell, a partner at Heartland, siting this as one of the reasons his firm was attracted to the company.
Heartland is well on its way to assembling a full service provider of metal products – a one-stop shop for auto companies’ metal needs. This was one of the firm’s goals upon entering the market in 1999 with the close of its debut fund.
“Consolidation in the automotive and automotive parts industries will be big in 2001,” said Tredwell. “And that’s good for us.”
Leslie Green can be contacted at