Firth Rixson (United Kingdom) - Nov 2007

unquote
01 November 2007

Tweet
Facebook
LinkedIn
Google plus
Send to

Oak Hill Capital Partners has acquired aerospace engineering business Firth Rixson from The Carlyle Group and Lehman Brothers in a £945m secondary buyout deal. The transaction was supported by a senior and mezzanine debt package of just under £600m provided by Lehman Brothers, GE Commercial Finance and Lloyds TSB Corporate Markets. Oak Hill initiated the deal by approaching Lehman Brothers to express its interest. Lehman Brothers retains a minority stake in the business alongside management and Oak Hill which holds approximately 75% of the company’s equity. The deal is expected to close in December 2007, subject to regulatory approval.

Exit deal

Carlyle and Lehman Brothers have realised their investments in Firth Rixson, with Lehman rolling over a minority shareholding into the newco. The returns made from Carlyle’s four-year involvement with Firth have not been disclosed, although they are understood to be impressive. The company in its current form is the result of the integration of three leading aerospace rings players. Carlyle acquired Firth in February 2003 in a £106m public-to-private transaction, investing through its US and European buyout funds, Carlyle Partners III and Carlyle Europe Partners (13 January 2003, page 25). Carlyle then merged Firth with existing Carlyle portfolio company Forged Metals, Inc, a Californiabased business Carlyle bought in 2000. Firth continued on the consolidation path with the acquisition of California-based Schlosser Forge Company in September 2004. In 2005, Firth became the first Western ring-roller to establish its own facility in China. Over the course of Carlyle’s investment, the company has won substantial new business on current and next generation aeroengine platforms as well as in critical industrial applications, establishing Firth as a major supplier to its global aeroengine and industrial customer base. In May 2007, Firth also acquired Future Tech, another California-based business specialising in the machining of ultra large aerospace components. Over the course of the holding period, Firth has substantially increased its revenues, profit margins and overall operating efficiency. Lehman Brothers completed a co-investment alongside Carlyle through an acquisition of a 36% interest in the company in September 2006. Carlyle remained the leading shareholder following the deal.

Company

Firth Rixson is headquartered in Sheffield and East Hartford, Connecticut. It supplies highly-engineered products to its global aerospace and industrial customers from 11 manufacturing facilities located in the US, UK, Hungary and China. The company employs more than 1,800 staff and generates profits of £100m on revenues of approximately £500m.

People

Rowan Taylor led the deal for Oak Hill Capital Partners. David Mortimer is the CEO of Firth Rixson. Ian Brown and James Burns worked on the deal for Lloyds TSB Corporate Markets.

Advisers

Purchaser - McFarlanes, Matthew Blows (Legal)Purchaser - Paul Weiss Rifkind Wharton & Garrison, (Legal)Vendor - Latham & Watkins, Farah O'Brien, Joe Sullivan, John Colahan, Mike Bond, Osman Zafar, Richard George, Sean Finn (Legal)Vendor - Lehman Brothers, (Corporate Finance)

Sourced from: UK & Ireland unquote" 358 (Dec 2007)