By: Bill Bregar
July 17, 2012
BRISTOL, CONN. (July 17, 12 p.m. ET) — Hot runner maker Synventive Molding Solutions gets a new owner this summer — Barnes Group Inc., a publicly traded global maker of high-precision metal components and springs for aerospace, industrial and transportation markets.
Barnes Group, based in Bristol, Conn., announced July 16 that it has agreed to pay $335 million for Synventive, which is based in Peabody, Mass., and runs manufacturing in the United States, Germany and China. Synventive should generate about $160 million in sales this year. Barnes officials expect the deal to close in August.
Synventive, one of the world’s largest hot runner manufacturers, will operate as a strategic business unit within Barnes Group’s industrial segment. That segment generated about 40 percent of Barnes’ total sales of $1.17 billion in 2011. Net profit for the year was $64.7 million.
Barnes, a 155-year-old industrial company, is buying Synventive from private equity firm Littlejohn & Co. LLC, which owned for a little more than a year. Littlejohn, of Greenwich, Conn., was the third straight private equity owner of the hot runner company.
In the plastics industry, the Barnes Group/Synventive hookup marks the second recent deal where a strategic industrial buyer has acquired a company from private equity. Nordson Corp. of Westlake, Ohio, bought screw and barrel manufacturer Xaloy Inc. and flat-die maker Extrusion Dies Industries Inc.
“We look at this as a valuable growth opportunity for our company,” said Bill Pitts, director of investor relations. “We’ve got a good growth engine in Synventive. It’ll be run as a standalone business.”
Synventive employs 770 people around the world.
Pitts explained the acquisition strategy during a July 17 telephone interview. Barnes Group is traded on the New York Stock Exchange.
Barnes Group executives want to add companies built on intellectual property that have strong international brand names. That’s because most of Barnes’ current business is “build to print” as a supplier, Pitts said. As an example, he cited components for jet engines and parts for car transmissions.
“We manufacture parts of high quality that meets the specifications that we have, so a lot of what we do is make things build to print,” Pitts said. About 63 percent of total sales come from domestic business.
Pitts said that business makeup means that Barnes is vulnerable to economic swings up and down.
Synventive meets the plan. “By moving into a more intellectual property-based business, we’re looking to mitigate some of those cycles,” he said.
Synventive also Barnes gives access to the broad plastics industry. According to Barnes, Synventive serves a global customer base of more than 3,000 molders, mold makers and equipment suppliers in 50 countries. Barnes Distribution offers more than 75,000 industrial products and supplies to more than 30 countries.
Barnes President and CEO Gregory Milzcik said the company will work to keep Synventive a strong worldwide hot runner maker.
“The global demand for more complex, highly technical injection molding solutions is anticipated to grow substantially in the future,” he said. “We are eager to add Synventive’s innovative products and services to Barnes Group’s core manufacturing capabilities and to work with them to create a stronger, more dynamic presence in the global marketplace.”
Barnes will retain Synventive’s existing management and operations, Pitts said. He said Barnes has done that before, with its Swiss unit, Hänggi Stanztechnik, which does progressive stamping, microstamping, precision cutting and forming.
This is not Barnes Group’s first foray into the plastics sector. In 2002, Barnes bought Spectrum Plastics Molding Resources Inc., a company in Ansonia, Conn., that specializes in insert and reel-to-reel molding. At the time, officials said that Spectrum Plastics would complement its Associated Spring business. Six years later, Barnes sold Spectrum to Spell Capital Partners LLC.
Pitts said that Synventive is not the same situation as Spectrum, which was to be integrated into Barnes existing operations. “This [Synventive] business here is intended to be a stand alone business,” he said.
Barnes Group was founded in 1857 by Wallace Barnes as a metal parts shop in Bristol. One early product: springs and hoops for the ladies fashion fad, hoop skirts. The company was renamed Associated Spring Corp. in the early 1920s. Its stock was first offered for sale in 1946, and Associated Spring was listed on the NYSE in 1963.
Associated Spring returned to its namesake roots in 1976, becoming Barnes Group.
Barnes Group will pay for Synventive with cash on hand and additional borrowing under its existing credit agreement. Executives will give more details about the Synventive acquisition during the second quarter earnings call on July 27.