Blue Water Automotive Systems Inc. has purchased the auto business of fellow injection molder Injectronics Inc. as part of a focused acquisition strategy.
The buyout, announced May 18 for an undisclosed sum, adds more than $60 million worth of business to Marysville, Mich.-based Blue Water, and new engineering and product-development capabilities.
``This is not growth for growth's sake,'' said President and Chief Operating Officer Andy Ridgway in a telephone interview.
Injectronics of Clinton, Mass., retains its medical and consumer products businesses in Clinton and Westborough, Mass.
Blue Water, purchased by private equity group KPS Special Situations Fund II in 2005, is targeting acquisitions that can bring something new to the firm, he said.
Injectronics has a strong engineering presence in interior trim parts, based out of its research facility in Farmington Hills, Mich. It also has manufacturing in Howell, Mich.; Wauseon, Ohio; and Burlington, N.C.
Blue Water, with an estimated $140 million in annual sales, also makes interior parts but has focused its engineering and design on its airflow-management products. Uniting the two companies will allow them to tap into each other's strengths, Ridgway said.
``It's an integration of two businesses that merge very nicely,'' he said.
The North Carolina and Ohio facilities also will help Blue Water chase an auto industry that has been moving into the South, said Mike Benson, managing director of Stout Risius Ross Advisors LLC, which consulted with Injectronics on the deal. Blue Water has 1,300 employees and seven manufacturing sites, six in Michigan and one in Mexico.
``Even 100 miles closer to the Southern corridor is going to help,'' Benson said.
Blue Water said it will retain Injectronics' 500 employees. The acquisition marks a turn for Blue Water, which has been in transition since 2000, when Switzerland's Sarna Polymer Holding Inc. bought the family-owned company.
Sarna had planned to use the operation as the base for a global expansion in the auto supply industry but, by 2004, backed away from those plans as it restructured.
New York-based KPS bought the company in September, and now Blue Water is one of a handful of firms actively seeking acquisitions in the auto industry. Most other buyers, though, have been seeking out distressed companies, while KPS has sought more strategic plays.
``This is not a turnaround situation,'' Ridgway said. ``We're not buying something that needs to be fixed. Since our ownership by KPS, we've looked at many, many opportunities. We also took feedback from our customers. We asked our customers who is out there that we should benchmark ourselves against, and Injectronics' name came up.''
``Injectronics was more of a premium play,'' Benson agreed. ``[Blue Water] was not trying to buy volume on the cheap.''
The combined engineering capabilities of the two firms, along with the manufacturing volume Injectronics adds, also establishes a solid base for Blue Water's continued growth, he said.
Blue Water will continue seeking out other acquisitions, but Ridgway stressed the firm will carefully consider every opportunity.
``The priority is the synergy and the combination for the businesses,'' he said.