TPMS maker Schrader sold for US$505 million

Tyre Pressure Monitoring System and valve supplier Schrader has been sold for US$505 million after parent company Tomkins agreed a deal with private equity firm Madison Dearborn Partners, LLC. The deal is subject to the normal conditions and is expected to close in the second quarter of 2012. Schrader, which produces both OE and aftermarket TPMS and valve products reported 2011 revenues of approximately US$451 million and adjusted EBITDA of approximately US$76 million.

Tomkins is itself owned by Onex Corporation and Canada Pension Plan Investment Board, which each hold 50 per cent each. Onex, one of North America’s oldest investment firms, confirmed details of the sale, explaining the price will be paid in cash plus “a small minority equity interest in the parent of the purchasing company.” Proceeds of the sale are expected to be used primarily to repay existing indebtedness at Tomkins.

News of Tomkins’ decision to sell Schrader emerged in November 2011. Back then the company was linked with a £550 million price tag so, in light of the US$505 million sale price it is not entirely clear if this was a currency communication problem, a realistic valuation, or part of the firm’s auction strategy. Either way it appears that company when for something less than the sellers may have hoped for. At the time a “handful of private equity firms” were reportedly approached regarding the sale so it is no surprise that the business has changed ownership into private equity hands.

Purchasing company Madison Dearborn Partners, LLC shed more light on the transaction, adding that affiliated business August Lux Holding Company entered into a definitive  purchase agreement to acquire “all of the equity interests in certain indirect subsidiaries of Pinafore Holdings B.V. that comprise the company’s Schrader division on 15 March 2012.

Barclays Capital Inc. and Goldman, Sachs & Co. served as financial advisors to subsidiaries of the Company involved in the transaction.  Guggenheim Securities, LLC acted as financial advisor to Madison Dearborn Partners, LLC. Latham & Watkins LLP and Kirkland & Ellis LLP served as legal advisors to the subsidiaries of the company involved in the transaction and Madison Dearborn Partners, LLC, respectively.

Schrader Electronics designs and manufactures its TPMS products at facilities including in Northern Ireland. The company’s customer list includes virtually ever car manufacturer in the world, including GM, Ford, Daimler, Chrysler, Nissan and Renault. Recently BMW awarded Schrader the first global contract to supply OEM motorcycle TPMS.