Jason Sandefur

B/E Aerospace To Buy Honeywell’s Aerospace Fastener Unit
B/E Aerospace Inc. agreed to buy Honeywell’s aerospace fastener distribution business, Honeywell Consumable Solutions, for $1.05 billion, transforming B/E Aerospace into one of the largest distributors of aerospace fasteners in the world.\
“The combination of HCS and B/E Aerospace will create a leading global distributor and value added supply chain manager of aerospace hardware and other consumable products from locations in all key geographic markets worldwide,” stated B/E Aerospace CEO Amin Khoury. “The combined company will serve as a distributor for every major aerospace fastener manufacturer in the world.”
As part of the deal, which is expected to close in the third quarter, B/E will enter into a 30-year contract to become Honeywell’s exclusive licensee to sell fasteners, seals and other products to the global aerospace industry.
With a combination of $800 million in cash and the remaining $250 million in common stock, B/E paid about twice HCS’ $524 million in revenue last year – reportedly about double the aerospace and defense sector’s price-to-sales ratio of 1.1 to 1.
By 2009, B/E’s distribution business segment “is expected to be our largest and most profitable segment and is expected to generate revenues of approximately $1.2 billion,” or about 43% of overall revenue at the company.
Integrating the two units is expected to take three years. The inventory investment required to convert the HCS business to B/E’s business model is expected to total approximately $200 million.
Honeywell acknowledged that HCS was a growing business, but said it no longer fit the parent company’s focus on more advanced technologies.
Market analysts seemed excited about the transaction.
“The deal lines up the two largest players in the aerospace fastener distribution market and solidifies B/E’s dominant position,” noted research analysts at Oppenheimer.
In 2007 B/E Aerospace reported its distribution segment, including fasteners, generated a 53.7% jump in sales to $386.5 million, reflecting a higher level of revenues from first and second tier aerospace manufacturers and from higher military sales. Operating income soared 69% to $85.5 million.
Overall revenue during 2007 jumped 48.7% to a record $1.68 billion, while net income rose 72% to $147.3 million.
B/E Aerospace acquired New York Fasteners Corp. (NYF) for $66.9 million in cash during 2007 and merged NYF’s hardware distribution and vendor-managed inventory business with its own distribution operations in Miami.
B/E Distribution operates a 355,760 sq ft distribution facility in Miami and an additional 67,000 sq ft facility in Stratford, CT; a 36,000 sq ft facility in Paramus, NJ; and a 49,000 sq ft facility in Wichita, KS. Web: beaerospace.com
Bufab Expands in Europe Through Finland Acquisition
Bufab continues to expand in Europe by acquiring Mercantile OY, which has operations in Finland and Estonia. The company distributes industrial fasteners with annual revenues of about SEK 190 millions and approximately 50 employees.
The new company will have the name Bufab MercapartnerOY.
“This is an important step for Bufab,” stated CEO Hans Bj�rstrand. “It gives us new possibilities to strengthen our positions in the Finnish and Estonian market and to strengthen our position to important strategic customers.”
Grainger Acquires Quebec-Based Excel Industriel
Grainger’s Canadian subsidiary, Acklands – Grainger, acquired Excel Industriel of Granby, Quebec. Excel is a business-to-business broad line distributor of fasteners and other MRO supplies. Terms were not disclosed.
“We are very excited about joining forces with Excel,” said Court Carruthers, President of Acklands – Grainger. “They are a leading player in the Eastern Townships of Quebec and have a long history of excellent customer service.”
Grainger expects an incremental sales contribution of $11 million from this acquisition over the next year. The two existing Acklands – Grainger and Excel branches in Granby will be merged within the next 60 days. Web: excel.qc.ca/English
In other news, Grainger announced plans to expand its operations throughout the Gulf region. The company will revamp its distribution network by opening four new facilities, relocating one other, and enhancing three existing facilities in the area.
“Our customers told us they wanted more of the products they need to maintain, repair and operate their facilities, positioned closer to them, and we listened,” stated Shaun Holladay, district Branch Services manager.
Grainger intends to increase its local workforce by approximately 35% and will increase the size of its distribution network in the area by 80%. Additionally, the amount of locally tailored inventory will increase by approximately 56%.
Grainger’s local investments are part of the company’s market expansion initiative, a multi-year program designed to enhance Grainger’s presence in the top metropolitan markets across the U.S. Grainger plans to invest between $50-$60 million in 2008 to expand and enhance its operations across the country.
Fastener sales helped boost Grainger revenue by $349 million in 2007, with total sales growing 9% to a record $6.4 billion.
Sales at Canada-based Acklands-Grainger, which calls itself “Canada’s largest distributor of industrial, safety and fastener products,” increased 12.6% to $636.5 million during 2007, and earnings more than doubled to $44.2 million.
Grainger has added more than 38,000 fastener products to its catalog since 2006. Web: grainger.com
Taiwan’s San Shing Gets $15m Investment
San Francisco-based private equity firm Lombard Investments Inc. announced a $15 million investment in automotive fastener maker San Shing Fastech Corp. of Taiwan. The transaction, which places Lombard on San Shing’s board of directors, closed on May 28, 2008.
San Shing will use the proceeds to expand its product line and enter new markets.
“(San Shing) enjoys an extraordinary reputation for high quality and creative engineering, and is very well positioned for growth in the global automotive parts industry,” stated Lombard managing director Thomas Smith.
Founded in 1965, San Shing listed on the Taiwan OTC in 1998. The company employs more than 1,100 at its manufacturing facilities in Tainan Hsein, Taiwan. San Shing operates as a fully integrated manufacturer, designing and producing tooling dies and production machinery, in addition to automotive fastener systems. San Shing has earned several quality assurance certificates, including ISO 9002, QS 9000 and ISO 14001.
Founded in 1985, Lombard has offices in Bangkok, Hong Kong and San Francisco, and extensive working relationships in Manila, Ho Chi Minh City and Taipei.
Nifco Plans China Expansion
Tokyo-based Nifco Inc. reportedly plans to open a new 2 billion yen (US$19 million) factory in Beijing, boosting its production capacity in China by 215,000 sq ft
The facility will produce plastic fasteners for the automotive market.
More than 30 units of injection-molding machines will be installed at the new facility, a sizeable increase from the dozen at the existing operation.
Nifco predicts sales in China will double to 12 billion yen (US$114.3m) by 2012, boosted by the country’s rapid car market growth.
Singapore’s Unisteel Going Private
Singapore fastener maker Unisteel Technology Ltd. agreed to be acquired by Kohlberg Kravis Roberts & Co. in a take-private deal valuing the company’s stock at 785 million Singapore dollars ($575 million).
KKR’s Latch Holding Ltd. will buy the business for S$1.95 a share, which is a premium of 42% to Unisteel’s one-month volume-weighted average price to April 15.
Unisteel was founded in 1988 and listed on the Singapore Stock Exchange in 2000.
Unisteel provides fasteners, precision components, and surface treatments for the mobile telecommunications, consumer electronics, industrial and automotive sectors. With manufacturing facilities in Singapore, Malaysia and China, the group last year generated net profits of S$47.5 million (US$34.7m) on revenue of S$274.8 million (US$200.55m). Profits were hurt by a weakening U.S. dollar, steel price hikes and a rise in the value-added tax levied on fastener exports by the group’s China subsidiaries, which increased from 4% to 12%. Web: unisteel.com.sg �2008 FastenerNews.com