DETROIT -- Metals and components supplier Tower International has agreed to be acquired by private equity-owned Autokiniton Global Group in a deal valued at $900 million, the companies said Friday.
Tower International and Autokiniton announced the acquisition Friday in a news release. They expect the deal to close in September or October.
New York-based KPS Capital Partners created Autokiniton last May with former Metaldyne Performance Group CEO George Thanopoulos to build a new auto supplier. Autokiniton then acquired metal stamper L&W Inc. It was expected more acquisitions would come.
Autokiniton agreed to buy all outstanding shares of Tower for $31 per share in cash — 70 percent over Tower International's Thursday closing stock price. The $900 million value includes Tower's debt and pension-related liabilities, the release said. Excluding the assumed debt and pension liabilities, the deal is worth about $641 million, based on the number of shares outstanding in Tower.
Nearly half of Tower's business, 47 percent, is with Ford Motor Co., according to the company's annual 10-K report filed with U.S. regulators. Another 22 percent of its revenue comes from Fiat Chrysler Automobiles and 12 percent flows from Nissan Motor Co. It also does some business with Toyota Motor Corp., BMW Group, Volkswagen Group and Honda Motor Co.
The supplier has faced obstacles over the years, including bankruptcy. It filed for Chapter 11 in 2005 as steel prices rose, emerging in 2007 under the ownership of private equity giant Cerberus Capital Management. But Cerberus later sold its shares of Tower in an $81.3 million initial public offering for 11 percent less than it initially paid for the supplier.
Tower sold its European unit in early 2019 in an effort to shift its focus to its North American business, as it found Europe a "difficult place for us to grow," spokesman Derek Fiebig told Crain's Detroit Business, a sibling publication of Automotive News.
In the first quarter Tower reported a net loss of $5.1 million, or 24 cents a share, compared with net income of $17.3 million, or 83 cents a share, in the year-ago period. Tower said first-quarter income from continuing operations was $7.7 million, compared with $16.5 million in 2018. First-quarter revenue was down 6.9 percent to $379 million.
The company announced in June that it was consolidating senior positions and trimming its leadership, including planning the exit of President Pär Malmhagen as the company divested Tower Europe and accelerating the retirement of COO Mike Rajkovic.
Tower CEO and President Jim Gouin praised the Autokiniton acquisition deal in the Friday release, saying Tower stockholders would "benefit from an immediate share price premium ... (and) customers will benefit from the expanded product offering and manufacturing footprint of Tower and AGG."
"Finally, Tower colleagues will benefit by becoming a part of a combined entity which will be a more competitive North American supplier with a complementary manufacturing footprint and lightweighting technologies that uniquely position it for continued profitable growth," he said in the release.
The deal includes a 35-day period in which Tower's board and advisers can look around for other acquisition proposals and terminate the deal if they find something better, the release said.
Tower, based near Detroit in Livonia, Mich., has around 5,700 staff. KPS Capital Partners managed about $5 billion in assets as of March through affiliated entities. Autokiniton is also based in suburban Detroit in New Boston, Mich.
Tower ranks No. 95 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $1.6 billion in 2018.
J.P. Morgan Securities LLC is acting as financial adviser for Tower, according to the release. Houlihan Lokey Capital Inc. assisted with providing a fairness opinion. Lowenstein Sandler LLP is Tower's legal adviser.
Goldman Sachs & Co. and Bank of America Merrill Lynch are Autokiniton's financial advisers in the deal. The company's legal adviser is Paul, Weiss, Rifkind, Wharton & Garrison LLP.
