Carlyle Management Group is running one automotive supplier, Key Plastics LLC, and has inked a deal to buy Breed Technologies Inc. to add to its Key Automotive Group.
And Carlyle is not done.
With tough economic conditions taking their toll on a number of companies, Carlyle is looking at more acquisitions, including plastics makers.
"There are a lot of opportunities," says Carlyle Management CEO B. Edward Ewing. "When we started Key Automotive Group, we'd said our goal was to be a $1 billion to $2 billion company within three years. Now (with the addition of Breed), we're looking at about $1.7 billion.
"My prediction is that in the next 12 months, we'll pass the $2 billion mark. As long as it makes business sense, we are in the acquisition phase."
Carlyle and Breed announced the proposed buyout for undisclosed terms in early March, with Ewing's group set to bring its turnaround system to the maker of airbags, seat belts, steering wheels and other vehicle safety systems, all which use a lot of plastic. The companies expect to close the deal by the end of April.
Carlyle Management - affiliated with financial company Carlyle Group of Washington - picked up its first automotive investment when it bought Key Plastics of Farmington Hills, Mich., out of Chapter 11 bankruptcy protection in 2001. It added the assets of injection molder Soo Plastics Inc. of Sault Ste. Marie, Mich., in December, folding it into Key Plastics.
Breed will stand as the second major platform within the Key Automotive Group, founded last year to coordinate Carlyle's acquisitions in the industry.
"We have an active acquisition group focused on the auto industry," Ewing says. "We're not in any hurry. I believe the down cycle of the industry will continue, probably longer than any of us want.
"During this period, if we can pick up really great companies, we will."
Ewing carefully differentiates his firm from those of purely financial players. Carlyle takes a hands-on approach to buyouts, seeking companies that have solid products, technology and people - but lack what he calls the "financial discipline" to survive in the long term. Financial players typically are not interested in running a business.
The approach has worked at Key Plastics, he says, taking it from a debt-ridden, bankrupt supplier of injection molded interior and exterior trim to a company that has regained its financial footing and rapidly improved quality and delivery.
At Breed, Carlyle will be undertaking a turnaround that scared off other bidders. Breed has market reach as the fourth largest global automotive safety supplier. It also has strong research programs, but it needs to improve its overall performance and its reputation among automakers.
Carlyle already has a team at Breed, checking out both its strengths and what needs to be changed quickly.
Says Ewing: "We identify the things that are running good, those that aren't running good and what we can do to make those things run better."
Rhoda Miel writes for Plastics News, a sister publication to Automotive News.