The report below gives a good overview of the fourth quarter M&A activity in the Industrials  sector. M&A activity for North American based target companies in the Industrials sector for Q3 2018 included 95 closed deals, according to data published by industry data tracker FactSet.

Fully one-third of the transactions had a Non-U.S. company as either the direct acquiror or the acquiror’s ultimate parent. Canadian and German firms were the most active buyers, and Sandvik AB from Sweden was involved in two transactions. Several of these are in the highlighted transactions table below. We believe the robust U.S. economy and more now-attractive corporate tax rates will auger well for strong additional in-bound investment.

Another six of the transactions were in the Oil & Gas industry, specifically drilling and development goods and equipment.

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The report below presents you with a good overview on the third quarter M&A activity in the Industrials  sector. M&A activity for North American based target companies in the Industrials sector for Q2 2018 included 96 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in June when Entegris, Inc. acquired SAES Pure Gas, Inc. from SAES Getters SpA for US$355 million in cash, funded from its available cash. The transaction expands Entegris’ semiconductor business. SAES Pure Gas is located in San Luis Obispo, California and manufactures and supplies gas purifiers. SAES Pure Gas reported a revenue and an adjusted EBITDA of US$91.5 million and US$33.1 million, respectively, for the fiscal year ended December 31, 2017.

Buoyed by a strong economy industrial production was strong during Q2 and is expected to remain that way into Q3.
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The report below presents you with a good overview on the second Quarter M&A activity in the Industrials  sector. M&A activity for North American based target companies in the Industrials sector for Q1 2018 included 60 closed deals, according to data published by industry data tracker FactSet.

One of the notable transactions of the quarter was announced in March when Tooling Technology LLC, a portfolio company of GenNx360 Capital Partners, acquired Century Tool & Gage Co, a portfolio company of First Capital Partners LLC, Broadgate Capital LLC (Texas) and Highline Equity Partners LLC, for an undisclosed amount. The transaction also includes Century Tool & Die and CTG Bel-Kur. The acquisition complements Tooling Technology LLC’s existing operations.

Manufacturing continues to adopt automation technologies to enhance quality, labor productivity and safety. While the population of robots in U.S. factories has increased dramatically the potential for further growth is enormous considering the size of the U.S. and our machine/worker ratio vs. traditional global peers Japan and Germany.

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The report below presents you with a good overview on the first quarter M&A activity in the Industrials  sector. M&A activity for North American based target companies in the Industrials sector for Q4 2017 included 209 closed deals, according to data published by industry data tracker FactSet. One of the notable transactions of the quarter closed in December when Linamar Corp acquired Macdon Industries Ltd from Moray Marketing, Inc. for CAD1.2 billion (US$933.6 million) in cash. Linamar Corp. is a.. Read more »

The fourth quarter M&A below provides you a good overview on activities in the Industrials Sector. M&A activity for North American based target companies in the Industrials sector for Q3 2017 included 124 closed deals, according to data published by industry data tracker FactSet.

One of the largest deals of the quarter closed in September when HB Fuller Co acquired Royal Adhesives & Sealants LLC, a portfolio company of American Securities LLC, for US$1.6 billion in cash. The consideration was financed through a new senior secured syndicated term loan facility with Morgan Stanley in an aggregate amount of US$2.1 billion, a public offering of new senior notes, and other financing alternatives. Royal Adhesives & Sealants manufactures and markets adhesives, sealants, and polymer coatings. The acquisition is in line with HB Fuller’s strategic objective to grow its engineering adhesives market.

The Industrials sector had a strong quarter on the public markets outperforming the S&P 500.

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The report below gives a good overview of the third quarter M&A activity in the Industrials Industry Sector. M&A activity for North American based target companies in the Industrials sector for Q2 2017 included 116 closed deals, according to data published by industry data tracker FactSet.

One of the largest middle market deals of the quarter was announced in April when A private group led by the Dutil family, Marcel Dutil’s holding company, Placements CMI Inc., and AIP LLC acquired Canam Group, Inc. for CAD557.9 million (US$411.5 million) in cash. Canam Group is located in Saint Georges, Québec, Canada and provides fabricated steel joists and construction components, semi-trailers and forestry equipment. As with the stock market as a whole, the Industrials sector has grown more than 8.2% since the start of 2017. Growth has, in part, been driven by a renewed focus on manufacturing in the U.S.

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M&A activity for North American based target companies in the industrials industry for Q3 2016 included 235 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $231 million.

On the public markets the industrials industry sector had an up-and-down quarter affected by shifting commodity prices, but ended strongly heading into Q4. Both presidential candidates have promised to make significant investments in infrastructure if elected, which should positively affect industrials stock moving forward.

Mergers in the highly concentrated industrial gas sector could trigger more asset sales as the largest suppliers look to clear antitrust hurdles. Germany-based Linde recently entered preliminary talks to merge with US-based Praxair, a combination that would make Linde/Praxair the leading global industrial gas supplier, according to The Wall Street Journal. That designation currently belongs to France-based Air Liquide, which grabbed the top spot in May 2016 when its $13.4 billion acquisition of US-based Airgas closed. Like Air Liquide and Airgas, Linde and Praxair will face intense antitrust scrutiny if the transaction proceeds and regulators could force the companies to divest certain production units. The Federal Trade Commission required Air Liquide and Airgas to sell off assets with revenues of $270 million before greenlighting their merger. Air Liquide agreed to sell 18 air separation plants, two nitrous oxide plants, four liquid carbon dioxide facilities, and three welding gas retail stores to New Jersey-based Matheson Tri-Gas (a subsidiary of Japan’s Taiyo Nippon Sanso) in June 2016.

Industry Indicators

• US nondurable goods manufacturers’ shipments of chemical products, an indicator of industrial chemicals production, rose 2.3% year-to-date in August 2016 compared to the same period in 2015.
• The spot price of crude oil, a key ingredient in industrial chemical manufacturing, rose 10.0% in the week ending October 7, 2016, compared to the same week in 2015.

Posted by John Hammett.

Read the Entire Industrials M&A 4th Quarter Newsletter Here

One of the most significant deals in the industrials industry announced this year was the announcement of Johnson Controls (JCI) merging with Tyco International (TYC), an Ireland-based fire and security provider. The two companies announced their merger agreement on Jan. 25 for approximately $14.35 billion in cash and stock. The transaction is expected to close in early September.

On the whole, US manufacturers do not anticipate major business disruptions to result from the UK’s decision to exit the European Union, according to polling conducted by the Institute for Supply Management (ISM) in July 2016. Among manufacturing industry purchasing executives polled, 58% said Brexit would have a negligible financial impact on their organizations. However, 38% reported they believed Britain’s exit would have a negative or slightly negative impact. Among those who expect a negative impact, more than half said it would stem from a change in the exchange value of the US dollar; 14% expected disruptions in global demand. Nearly 85% of those polled said Brexit would have a negligible impact on capital spending, and fewer than 15% expected it to negatively affect their workforces. The ISM also reported that US manufacturing activity grew in June 2016 for the fourth consecutive month, and that 13 of 18 reporting industries reported expansions in activity. After a prolonged period of weak growth, US manufacturing may be improving amid a weaker dollar and strengthening energy markets, according to The Wall Street Journal.

Industry Indicators

• Total US manufacturers’ shipments, which indicate manufacturing sector activity, fell 2.7% year-to-date in May 2016 compared to the same period in 2015.The spot price of crude oil, which indicates energy prices paid by manufacturers, fell 29.1% in the week ending April 8, 2016, compared to the same week in 2015.
• The spot price of crude oil, which indicates energy prices paid by manufacturers, fell 10.8% in the week ending July 8, 2016, compared to the same week in 2015.

Posted by John Hammett.

Read the Entire Industrials M&A 3rd Quarter Newsletter Here

Four major business categories, manufacturing, healthcare, business services and distribution, account for approximately 80% of the deal activity reported to GF Data, a company charting middle market private company transactions.   The manufacturing M&A sector, coming off a banner year in 2015, is poised to continue right where it left off in 2016 in terms of middle market mergers and acquisitions activity.

During the first quarter of this year, manufacturing deal values averaged 6.5X EBITDA (earnings before interest, taxes, depreciation and amortization).  The averages are further segmented by whether or not there was a “branding” component involved in the manufacturing process, which added between 1.2X to 2.1X to the multiple. Deal size also played a role in manufacturing company valuation with transaction values between $50 and $100 million commanding the highest prices. Add-ons in the manufacturing sector between $25 and $50 million commanded slightly higher multiples than those under $25 million.

Data also suggests that the debt levels used to complete manufacturing transactions varies slightly by deal size, with the most debt being deployed for deals between $50 and $250 million at 4.1X EBITDA.

In addition, data shows that when an acquirer adds-on to an existing platform investment in their portfolio, they use markedly higher levels of debt than they do on the initial platform deal.  The deal is actually being financed based on the characteristics of an entity other than the business being acquired.

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M&A activity for North American based target companies in the Industrials industry for Q1 2016 included 216 closed deals, according to data published by industry data tracker FactSet.  The average transaction value was $126 million.

US production of manufactured goods increased 1.8% in February 2016 compared to the same month a year earlier. February’s rise represented the third consecutive monthly gain in US manufacturing output, which some economists are viewing as a sign that the sluggishness of the US manufacturing sector may be easing, according to the Wall Street Journal. US manufacturing growth has been hindered in recent months by weak global demand, a strong dollar that makes US goods more expensive in overseas markets, and low oil prices. The February gains in manufacturing production were led by motor vehicles and parts, which saw a 9.1% rise compared to February 2015. Growth in other key segments of the US manufacturing sector was muted in February. Consumer goods production rose 1.1%, while that of computer and electronic products saw a 1.5% gain. Production of industrial equipment declined 3.7%. Continued soft demand for US exports may prompt manufacturers to reduce their inventories, which could create further ripples of demand weakness within the overall manufacturing sector.

Industry Indicators

• Total US manufacturers’ shipments, which indicate manufacturing sector activity, fell 2.2% year-to-date in February 2016 compared to the same period in 2015.  In combination with the increase in production (see above), this indicates a significant increase in inventories in the sector.  If this isn’t followed by a pickup in shipments in the coming months, industrial producers will have to cut back on production again. Total US wholesale sales of durable goods, a potential measure of industrial demand, rose 1.5% in November 2015 compared to the same month in 2014.
• The spot price of crude oil, which indicates energy prices paid by manufacturers, fell 29.1% in the week ending April 8, 2016, compared to the same week in 2015.

Posted by John Hammett.

Read the Entire Industrials M&A 2nd Quarter Newsletter Here