A private equity firm and members of Nortek Inc.'s management have a final agreement to buy the building products conglomerate in a $1.6 billion cash and debt deal.
Kelso & Co. LP of New York teamed with current members of the vinyl extruding firm's management for the $46 per-share cash buyout of 11 million shares. That management team is lead by Richard Bready, Nortek's current chief executive officer.
Providence, R.I.-based Nortek announced in April that it had entered into negotiations with Kelso, but the proposed buyout was under scrutiny from investor groups, whose leaders insisted the $40 per-share bid was inadequate. Since that time other interested parties had the opportunity to bid.
The original offer was only 6.6 times Nortek's 2001 earnings before interest, taxes, depreciation and amortization, analysts said. That multiple was a solid value, but not a premium. The new figure pushed that multiple to 7.5.
Speculation also has surfaced that the firm is looking to sell its vinyl siding businesses, which include Napco Inc. in Valencia, Pa., and Variform Inc. in Kearney, Mo. Nortek also owns decking extruder Kroy Building Products Inc. of York, Neb.
Kelso officials reached June 24 by telephone would not comment.
Nortek officials did not return calls seeking comment.
Officials expect the deal to close in the third quarter, pending shareholder approval and available financing. Kelso has said in the past it would fund the acquisition through a combination of funds provided by Kelso affiliates and cash on hand at Nortek.
In its news release, the company said Nortek will continue to operate under its current name and operating structure. In its 2001 annual report Nortek said it has grown to be the No. 3 producer of vinyl siding in North America. Its windows, doors and siding products group made up 27 percent of $1.86 billion in 2001 sales.