Platinum Equity Sees Long-Term Growth for TFS

Jason Sandefur

A new name and brand image seem to be the biggest changes facing Textron Fastening Systems when Platinum Equity closes the $630 million deal to buy the automotive fastener giant.\ TFS is expected to continue operating from its headquarters in Troy, MI, communications director Tim Weir told FIN. TFS management, led by president Rick Clayton, continues to handle operations. Likewise, there are no current plans to consolidate facilities or layoff TFS” 9,000 employees at 39 facilities around the world, including 19 in the U.S.
“It is our intention that, at the time of the divestiture, all current TFS employees will be transferred to Platinum Equity,” Weir explained.
Once the deal is finalized most likely during the third quarter of 2006 TFS will function as a separate business.
“Platinum Equity does not intend to integrate our business into an existing management structure,” Weir noted. “TFS would continue to operate separately, while reporting to an operating board established specifically to provide guidance and oversight to the business. TFS management will be part of this board.”
Weir sounded a positive note when he told the Rockford Register Star that “after a decade of consolidations and acquisitions, Textron Fastening Systems officials see promise in the next 10 years.”
Platinum May Buy Other Fastener Firms
When the agreement Platinum Equity”s first foray into the fastener industry – was announced on June 1, CEO and founder Tom Gores described the bidding process as “very competitive” and called TFS “a great platform for growth in a consolidating market.”
Gores alluded to “long-term plans to build this business” in the press release discussing the deal. And Matt Young, senior vice president for mergers and acquisitions at Platinum, told TheDeal.com that Platinum Equity will look to acquire other businesses “and we hope to build on what Textron has built already.”
Founded in 1995, Platinum Equity is an M&A&O firm that invests in information technology, telecommunications, logistics and manufacturing. The firm owns 18 portfolio companies with total consolidated revenue of $13.5 billion. The company is listed at No. 18 on the 2005 Forbes Largest Private Companies list.
The majority of the company”s client lineup is the result of acquisitions made with such blue chip corporations as General Electric, Motorola, Lucent Technologies, AT&T and IBM.
According to PlatinumEquity.com, the company takes a “managed entrepreneurship” approach with each business it buys, allowing the acquired company to manage the daily operations after growth strategies are defined.
“Platinum Equity does not acquire businesses with a predefined exit strategy; rather it is focuses on the entry strategy. Beginning with a deep appreciation for the employee skill sets and customer relationships, Platinum is intent on nurturing and supporting a company”s growth and enhanced value,” the company states on its website.
Textron Leaving Fastener Industry
Upon completion, the deal will mark parent company Textron”s exit from the fastener business. Textron first entered the fastener industry in 1955 by acquiring Rockford, IL-based Camcar, which was later integrated with fastener manufacturer Elco to create Textron Fastening Systems in 1995.
Financial analysts expressed relief that Textron was able to sell TFS to a single buyer, despite the lower-than-expected price of $630 million. News of the pending sale seemed to reassure nervous investors concerned about the fastener business” shifting fortunes.
“Analysts say fasteners were a drag on Textron, which also makes commercial and military aircraft along with other products, because of a competitive field and rising costs for raw materials, the Wall Street Journal reported on June 2. �2006 FastenerNews.com