NEW YORK—Carlisle Companies Inc. has found a buyer for its Carlisle Tire & Wheel subsidiary.
American Industrial Partners (AIP), a middle-market private-equity firm specializing in North American-based industrial businesses, has agreed to pay $375 million for the Carlisle Transportation Products (CTP) business, which includes the specialty tire and wheel unit.
In business since 1989, AIP manages a portfolio totaling more than $1 billion in committed capital. Its holdings include Allied Specialty Vehicles and Heil Trailer International Co.
The transaction is subject to customary closing conditions, including regulatory clearances in the countries where CTP has operations, and is expected to close in the first quarter of 2014, Carlisle said.
Dino Cusumano, a partner with AIP, said his company is “impressed with the CTP business and excited about the opportunities that exist for this business. We anticipate a very successful partnership.”
AIP did not elaborate on its reasons for wanting to buy CTP or its plans for the business, which reported 2012 sales of $778 million and $52.4 million in operating income (6.8 percent of sales). The tire and wheel business represents an estimated $375 million to $400 million of that total.
CTP President Kevin Forster, in a statement posted on CTP's website, said the company under AIP will “continue to focus on improving our market position, improving operations and expanding sales to our global customers by leveraging our strong leadership team.”
CTP manufactures and distributes bias-ply and radial tires, stamped and roll-formed steel wheels and tire and wheel assemblies to non-automotive customers, and power transmission belts and related components. It manufactures tires at plants in Clinton and Jackson, Tenn., and Meiyan, China.
“The sale of CTP is a major step in furtherance of Carlisle's initiatives to focus on and invest in higher-margin, faster-growing businesses,” said Carlisle Chairman, President and CEO David Roberts.
Carlisle announced earlier it recorded a non-cash pre-tax loss of $100 million at CTP for goodwill impairment during the second quarter.
AIP has obtained equity and debt financing commitments of $130 million, Carlisle said in an 8K filing with the Securities and Exchange Commission, while SunTrust Bank and SunTrust Robinson Humphrey Inc. have committed to provide debt financing of up to $375 toward the transaction.
Divesting the tire business separates Carlisle from its historical roots. The company was founded in 1917 in Carlisle, Pa., as an inner tube producer.
For the quarter ended Sept. 30, CTP reported an 88-percent improvement in pre-tax operating income to $13.9 million on 4.1-percent higher sales of $172 million. Carlisle attributed the unit's earnings improvement to higher sales volume, lower raw materials costs and other cost reductions.
Sales in the outdoor power equipment, power transmission and high-speed trailer segments were up 18, 12 and 5 percent, respectively. Offsetting these gains partially was a drop in sales in the power sports market.
The earnings improvement did not, however, overcome losses in the first six months. CTP's operating loss for the nine months ended Sept. 30 was $58.4 million, which contrasts with earnings of $47.7 million in 2012. Sales of $602.9 million were 13.4 percent below those in 2012.