Carlyle Management Group already is running one automotive supplier, Key Plastics LLC, and has inked a deal to buy Breed Technologies Inc. to add to its Key Automotive Group.
And CMG is not done yet.
With tough economic conditions taking their toll on a number of companies, CMG is looking at more acquisitions, including plastics processors, during the coming months.
``There are a lot of opportunities,'' said Carlyle Management Chief Executive Officer B. Edward Ewing during a March 12 telephone interview. ``When we started Key Automotive Group, we'd said our goal was to be a $1 billion to $2 billion company within three years. Now [with the addition of Breed], we're looking at about $1.7 billion.
``My prediction is that in the next 12 months, we'll pass the $2 billion mark. As long as it makes business sense, we are in the acquisition phase.''
Carlyle and Breed announced the proposed buyout for undisclosed terms March 4, with Ewing's group set to bring its turnaround system to the maker of plastics-intensive air bags, seat belts, steering wheels and other vehicle safety systems. The companies expect to close the deal by the end of April.
Dallas-based Carlyle Management - affiliated with Washington-based financial company Carlyle Group - picked up its first automotive investment when it bought Key Plastics of Farmington Hills, Mich., out of Chapter 11 bankruptcy protection in 2001. It added the assets of injection molder Soo Plastics Inc. of Sault Ste. Marie, Mich., in December 2002, folding it into Key Plastics.
Breed will stand as the second major platform within the Key Automotive Group, founded last year to coordinate CMG's acquisitions in the industry.
``We have an active acquisition group focused on the auto industry,'' Ewing said. ``We're not in any hurry. I believe the down cycle of the industry will continue, probably longer than any of us want.
``During this period, if we can pick up really great companies, we will.''
Ewing carefully differentiates his firm from pure financial players. CMG takes a hands-on approach to buyouts, seeking companies that have solid products, technology and people - but lack what he calls the ``financial discipline'' to survive long term. Pure financial players typically are not interested in running a business.
The approach has worked at Key Plastics, he said, taking it from a debt-ridden, bankrupt supplier of injection molded interior and exterior trim to a company that has regained its financial footing and rapidly improved quality and delivery.
``What we do is remove the obstacles that prevent people from doing their jobs better,'' he said.
At Breed, Carlyle will be undertaking a turnaround that scared off other bidders.
Lakeland, Fla.-based Breed had a strong reputation under founder Allen Breed, but floundered after his death in 1999. It entered Chapter 11 in 2000, re-emerging more than a year later with its major lenders taking an ownership stake in the now privately held operation. John Riess, the retired head of Gates Rubber Co., took on the jobs of CEO and chairman.
CMG ``has shown a keen understanding of the issues facing Breed Technologies, the safety systems market and the automotive market as a whole,'' Riess said in a news release.
Breed has market reach as the fourth-largest global automotive safety supplier. It also has strong research programs, but it needs to improve its overall performance and its reputation among automakers.
CMG already has a team at Breed, checking out both its strengths, and what needs to be changed quickly.
``We identify all the things that are running good, those that aren't running good and what we can do to make those things run better,'' Ewing said. ``Then from day one, week one, we will implement them.''
