AUBURN HILLS, MICH. — Private equity firm Littlejohn & Co. LLC has completed the sale of Henniges Automotive Inc. to two partners.
Aviation Industry Corp. (AVIC) of China, a Chinese state-owned aerospace and defense company, and BHR — a China-U.S. investment firm engaged in cross border and alternative investments — will combine to pay $600 million for Henniges and structure the transaction as a joint acquisition, according to a Sept. 15 BHR news release. AVIC will own 51 percent and BHR the remaining 49 percent.
Henniges CEO Douglas DelGrosso said that Henniges does not anticipate any significant changes to the firm's employment or management team. BHR said in its release it is confident in the potential for growth of Henniges under the continued management of its current team with the new backing of AVIC and BHR.
Littlejohn acquired Henniges in 2010, and in the years since Henniges has executed several strategic acquisitions and alliances to solidify the firm's position as a supplier of premium sealing solutions.
Henniges said Littlejohn helped the firm secure nearly $500 million in new business and drive operational improvements throughout the organization during the last three years. Henniges reported $824.8 million in revenue for 2014 compared to $611 million in 2011.
“Littlejohn historically holds companies for about a five-year period,” DelGrosso said. “They typically look for the right environment to maximize their return on their investment. I think they felt the automotive market is strong right now and that the company is performing well. When you think about it from their perspective, it certainly was an opportune time to market the company.”
DelGrosso said AVIC can provide Henniges avenues to the domestic Chinese automotive market, which up until recently has not been a market Henniges has pursued aggressively. The firm adds to AVIC's automotive portfolio, which also includes Saginaw, Mich.-based Nexteer Automotive, a supplier of steering and driveline acquired by AVIC in 2011.
BHR said its set of international stakeholders reflect the financial prowess of China's largest financial institutions — including Bank of China International, Bohai Industrial Investment Fund, China Development Bank Capital, Ample Harvest and the networks and cross-border excellence of RSB L.L.C. and Thronton Group L.L.C.
“We're excited with the new ownership,” said Boris Gavric, vice president of global sales and marketing for Henniges. “I think they're going to provide us with a lot of assistance to continue growing in the positive trajectory that we've had so far.”
Henniges provides carmakers with sealing systems for doors, windows, trunks, lift gates, sunroofs and hoods. It also supplies the automotive market with anti-vibration products, encapsulated glass and other components using both plastics and rubber.
With its headquarters in Auburn Hills, the company operates 15 manufacturing plants and five engineering and technical centers with about 7,000 employees in six countries.
The firm currently operates five manufacturing facilities in China: in Beijing, Changchun, Chengdu, Tianjin and Tieling. It has three facilities in Mexico — in Gomez Palacio, Torreon and Guadalajara — and four in the U.S., in Frederick, Okla.; New Haven, Mo.; Reidsville, N.C.; and Keokuk, Iowa. Other factories are in Burlington, Ontario; Hranice, Czech Republic; and Rehburg, Germany. The firm operates technical centers in Beijing; Rehburg; Viersen, Germany; Mlada Boleslav, Czech Republic; and Auburn Hills.
“We see continued opportunity in China as the market continues to grow, and we recognize that it will retract and grow over time, so we're willing to be patient. We're very optimistic long term on the Chinese market,” DelGrosso said. “If we look at Europe, we see continued growth in the European market. We think we're very well-positioned with our Eastern European manufacturing footprint to capitalize on that.”
Henniges recently announced plans to add a fourth site in Mexico, and a second in Gomez Palacio, to be operational by 2016. The 323,000-square-foot factory in Gomez Palacio will support six vehicle platforms and is expected to employ 1,200. The firm said it will be its largest facility in the country and second largest worldwide.
The firm also plans to add a sales office in Munich and a new technical and tooling center in Beijing.
“This applies for all markets, but is certainly true in North America, we see our customers have a greater demand for our product than they've had in the past,” DelGrosso said. “We're always willing to support our customers where they continue to grow.”
Littlejohn has left quite a legacy at Henniges, helping grow the firm's sales by about 35 percent since it took over in 2011. Under the private equity firm's ownership, Henniges completed a strategic add-on acquisition in Eastern Europe, fully consolidated ownership of its joint venture in China, launched production in four new manufacturing facilities in China and Mexico, and established several strategic alliances worldwide.
Since 2011, Henniges has added facilities in Tianjin, Tieling, Chengdu and Torreon with the support of Littlejohn.
“Littlejohn was a great supporter of the management team,” DelGrosso said. “They had a clear vision of where they wanted the business to move.”
In October 2011, Henniges acquired Nomaseal s.r.o., which brought Henniges' Hranice facility and Viersen technical center into its portfolio. Nomaseal produces thermoplastic elastomer-based static sealing systems with a focus on weatherseals for automobiles.
In January 2014, Henniges acquired the remaining 40 percent of Beijing Wanyuan-Henniges Sealing Systems Co. Ltd., its China-based joint venture it started with China Academy of Launch Vehicle Technology in 1995 that now operates under the Henniges Automotive name. The purchase integrated the firm's five Chinese manufacturing plants and a technical center into its global profile.
DelGrosso said Henniges has tripled its sales in China since 2011 to about $150 million.
Henniges also secured a number of strategic alliances under Littlejohn's ownership with a flurry of activity in late 2013 and early 2014. It secured alliances with AD Plastik d.d.'s facility in Togliatti, Russia; Amee Rubber Industries Pvt. Ltd. and Burkool S.A.
AD Plastik manufactures plastic products — ranging from door paneling and instrument boards to ashtrays and ceiling light fixtures — for the auto industry.
Amee produces sealing systems and molded rubber parts for automobiles throughout India. The firm, headquartered in Mumbai, India, operates a plant in Gujarat, India.
Burkool is a sealing components manufacturer based in Buenos Aires.
DelGrosso said at the time the plan was to have an answer for any region that Henniges' major customers operate in because many OEMs are building off global platforms, thus want to deal with single-source suppliers that have the ability to also provide a global platform.
All three strategic alliances are in regions where the firm currently does not have a manufacturing presence. The agreements allow Henniges to utilize extra capacity in the three suppliers' manufacturing plants for production if business is awarded to Henniges.
Recently, Henniges formed a strategic alliance with Anhui Tousheng Auto-Parts Co. Ltd., a supplier based in Guangde, China. The firm said in August that Henniges and ATA will share a technical and manufacturing alliance to support the anti-vibration needs of a key customer, which enables Henniges to grow its business platform and expand its footprint.
ATA is a supplier of rubber dampening and other rubber products that reduce vibration.