The transaction is expected to be immediately accretive by at least $0.40 per share to EPS in fiscal 2020
The Eastern Company, an American firm that manufactures custom-engineered industrial, vehicular and speciality hardware, has acquired Big 3 Precision Products and Big 3 Precision Mold Services (collectively called Big 3 Precision) for $81.7m (£67m) from TVV Capital.
Big 3 Precision is a provider of turnkey packaging solutions and serves several markets, including truck, automotive, plastic packaging products, packaged consumer goods and pharmaceuticals, through Big 3 Precision Products and Big 3 Precision Mold Services.
Big 3 Precision Products designs and produces custom returnable packaging for manufacturers to integrate with their assembly processes, while Big 3 Precision Mold Services designs and manufactures blow mould tools.
Eastern expects the transaction to be immediately accretive
Excluding transaction expenses and purchase accounting adjustments, the transaction is expected to be immediately accretive by at least $0.40 per share to EPS in fiscal 2020.
Eastern president and CEO August Vlak said: “In acquiring Big 3 Precision, we are adding a substantial new growth business and moving Eastern closer to our long-term goal of generating $100 million in EBITDA.
“This transaction, our third acquisition in three years, represents another step toward our ambition of building a larger company that has a strong presence with key customers and in key markets.
Eastern refinanced its existing credit agreement with a new $100m term loan and $20m revolving credit facility to fund the acquisition of the US company.
Vlak said: “We believe Big 3 Precision will become a strong contributor to our top line, earnings growth and cash flow. Going forward, to create value from this investment, we intend to execute a multi-pronged plan that leverages Eastern’s management disciplines and operating approach; takes advantage of Eastern’s customer relationships to accelerate further market expansion; and expedites growth through bolt-on acquisitions.”
Big 3 Precision president Todd Riley said: “My colleagues at Big 3 Precision and I are enthusiastic about becoming a part of Eastern to fully capture the organic revenue and margin expansion potential in our businesses.
“We are also excited about the opportunity to take advantage of the fragmented nature of our markets to augment Big 3 Precision through bolt-on acquisitions.”
Based on its unaudited, internal financial statements, for the 12 months ended 30 June 2019, Big 3 Precision recorded sales of $72.2m and Adjusted EBITDA of $13.4m.