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Carlisle buys Tri-Star for $285M

by Taina Rosa | Published November 15, 2011 at 12:55 PM

Private equity firm Brockway Moran & Partners is selling electronic interconnect components maker Tri-Star Electronics International Inc. to diversified manufacturer Carlisle Cos. for an enterprise value of $285 million.

El Segundo, Calif.-based Tri-Star makes contacts and connectors used to transmit data and power on aircraft and defense platforms, and in high-end industrial equipment. The company, which has facilities in Riverside, Calif., and Lugano, Switzerland, will operate as part of Carlisle Interconnect Technologies.

Equity analysts who cover the Charlotte, N.C.-based conglomerate said the company is paying about 3 times Tri-Star's sales of $95 million, an above average multiple. Another analyst estimated the deal value at about 11 times trailing Ebitda of $26 million.

Michael E. Moran, managing partner at Brockway Moran, said in a statement, "This transaction is an excellent result for the shareholders of Tri-Star, generating over a 5x return on investment, approaching a 50% annualized rate of return and reflecting the outstanding job done by the Tri-Star management team and employees during our ownership period."

Carlisle posted net sales of $2.4 billion in the nine months to Sept. 30 on Ebit of $222.4 million, up from $1.9 billion in net sales on Ebit of 169.3 million for the same period in 2010. The company has a market cap of $2.7 billion.

Carlisle's shares closed Monday at $44.01, up 1.34%.

"Tri-Star has been consistently profitable and expands our product and service range to our customers," Carlisle CEO David Roberts said in a statement.

Tri-Star's purchase is roughly comparable to Esterline Corp.'s acquisition of Versailles, France-based industrial connector maker Souriau Group SAS, the second analyst said. In May, Bellevue, Wash.-based military and civil aviation components maker Esterline said it would pay $715 million for Souriau, or about 11 times Ebitda of $64 million. The seller, private equity firm Sagard SAS of Paris, bought Souriau in 2006 for an undisclosed amount with cash from its €535 million ($730 million) Sagard I fund.

In defense sector transactions, buyers paid an average 1.2 times sales in the first quarter of 2011, according to PricewaterhouseCoopers LLP. This is much lower than Esterline's offer for Souriau, at just over 2 times sales.

Tri-Star has gone through a series of private equity owners.

In 2003, Odyssey Investment Partners LLC acquired Seattle-based Aviation Technologies Inc. and carved out Tri-Star, separating it into a standalone company. Odyssey then sold Tri-Star to Boca Raton, Fla.-based Brockway Moran in February 2007 via a recapitalization while keeping a minority stake. Odyssey did not disclose financial details of the recap.

At the same time, Odyssey also sold the rest of Aviation Technologies to Cleveland-based TransDigm Group Inc., a designer, producer and supplier of highly engineered aircraft components, for about $430 million.

Meanwhile, Brockway Moran partnered with management and Mark J. Silk, former CEO of Integrated Aerospace Inc., a Brockway Moran portfolio company from 1999 to 2004.

Moran said Odyssey and Silk, which held undisclosed minority positions in Tri-Star, are also cashing out.

Carlisle has made one other acquisition so far this year. In August it announced it completed the acquisition of PDT Phoenix GmbH for about €80 million in cash, or about 1 times sales. PDT manufacturers rubber-based roofing membranes and industrial components, with facilities in Hamburg and Waltershausen, Germany.

Carlisle's Tri-Star acquisition is expected to close by the end of the year.

Carlisle, Tri-Star and Odyssey did not return calls.

SunTrust Robinson Humphrey Inc. acted as Carlisle's exclusive financial adviser.

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