ACQUISITION: Lamar Hunt Group to Acquire Lone Star / Walker; Price Quadruples in One Year

John Wolz

A Dallas private equity firm backed by the Lamar Hunt family has agreed to acquire Lone Star Fasteners LP for $33.5 million.\
The amount is more than four times the price paid to T-3 Energy Services Inc. for the Houston manufacturer last year, the Houston Business Journal reported.
Trinity Hunt Partners, backed by the Hunt family and New York”s Capital Z Investment Partners, is expected to close the deal this month.
In February 2004 a six-member investment group of Louisiana-based oil-industry investors led by Bruce Ross acquired Lone Star for $7 million.
Ross, the Lone Star CEO, told Houston Business Journal reporter Jim Greer that investors made “a quick and phenomenally high return.”
Fastener acquisition specialist Richard Hagan of New York-based Pinnacle Capital Corporation agreed that Ross did well. “The selling price must have been a pretty high multiple of cash flow and was certainly an out-of-the-park homerun for Bruce Ross and his partners,” Hagan observed.
Ross will retain about 15% of Lone Star and remain CEO.
Lone Star revenue jumped nearly 50% since Ross acquired it.
“Many of Lone Star”s clients are in refining or oil and gas exploration and production,” Greer reported. “Those sectors have enjoyed robust performance during the last two years.”
T-3 had held LSS-Lone Star-Houston Inc., Walker Bolt Manufacturing Company and Ameritech Fastener Manufacturing since merging with Industrial Holdings Inc. in 2001.
When Ross acquired Lone Star, Judy Jandl and several other management team members left, and Jandl formed Sigma Fasteners.
Ross correctly predicted when he acquired Lone Star that, “We all know it is a cyclical business, and we believe the cycle is on the way up.” He also commented that in searching for an acquisition “we kissed a lot of frogs. This one is the prince. Lone Star has great people, products, capabilities, manufacturing, plating and a strong client base. It is a great business.”
T-3 CEO Gus Halas explained in 2004 that the fastener companies were sold because they “did not fit with our core competence.” T-3 provides oilfield products and services in the upstream oil and gas industry, petrochemical and refinery plants, shipyards and offshore fabrication companies.
Lone Star manufactures and distributes standard and specialty bolting for the energy industry and provides in-house coating services. Walker Bolt manufactures fasteners in small quantities and Ameritech produces military and aerospace parts. Web: LSSLoneStar.com �2005 FastenerNews.com