Century-old fastener manufacturer Erico Global Co., Solon, Ohio, has agreed to be acquired by U.K. industrial specialist Pentair plc, Manchester, U.K., for $1.8 billion in cash including repayment of Erico debt. Erico joins well-known brands including Hoffman and Schroff enclosures and Raychem heat tracing equipment as part of Pentair Technical Solutions.
The transaction values Erico at approximately 12-times 2015 forecasted earnings. Pentair plans to fund the transaction with a combination of cash and investment-grade financing. In an investor call regarding the acquisition, Pentair Chairman and CEO Randy Hogan said Erico has annual revenue of almost $600 million and is very profitable with strong cash flows.
“Erico will expand Technical Solutions’ presence into the faster growing commercial space, as well as the industrial space,” Hogan told investors. “Erico’s broad product portfolio also strengthens Technical Solutions’ focus on physical protection for critical applications by electrical customers. Further, the expanded product offering will allow Technical Solutions to provide broader solutions to our target end-users, including building electrical installers, electrical control panel manufacturers, electrical heat trace designers and electronics design engineers. The complementary nature of the products, geographies, distribution channels and sectors served helps ensure that there should be minimal disruption to customers and whatever changes there are, we expect that synergies will come mainly through the application of lean and back office standardization.”
Erico was founded in 1903 as the Electric Railway Improvement Company and has grown into a global manufacturer and marketer of engineered electrical and fastening products for electrical, mechanical and civil applications. The company has 1,200 employees in 30 countries with recognized brands including Caddy Fasteners among a range of fixing, fastening and support products, Erico and Cadweld electrical grounding, bonding and connectivity products and Lenton engineered systems.
Martin Electrical Sales, Kirkwood, Mo., has been representing both Erico and Hoffman for decades, taking on the Hoffman line in 1958 and Erico in 1965. Nancy Martin, the agency’s president, said they’re both part of the family and although there hasn’t been a lot of information coming yet from the companies, she expects the synergies to be valuable in the market.
“It gives the Pentair name more visibility for the commercial construction market than they’ve had with just Hoffman,” Martin said. “Erico has been strong in my market, with good brand preference across the board, especially with Caddy and Cadweld. Contractors love them. Caddy is an innovative company with lots of new products all the time, so it’s fun to represent them. There’s always something to leave on the customer’s desk and that helps us in the field. They also have good sales leadership that’s continued to help them grow. They’ve done a very good job marketing, with the little Caddy man that’s very recognizable in their marketing materials.”
