Coleman Cable Inc., Waukegan, Ill., has agreed to acquire all of the equity interests in Copperfield LLC, Bremen, Ind., for $213 million in cash.
It’s a move Coleman Cable executives believe will help the company become one of the premier U.S.-based manufacturers of electrical and electronic wire and cable products.
Spell Capital Partners, a private equity and buyout firm based in Minneapolis, is currently the majority owner of Copperfield, one of the largest private fabricators and insulators of copper electrical wire and cable in the United States. Copperfield sells its wire and cable products to industrial distributors and OEMs in a broad array of markets, including the electrical, recreational vehicle, transportation, appliance and welding cable sectors. Copperfield estimates its revenues and EBITDA for the 12 months ended Dec. 31, 2006, will be approximately $520 million and $35.3 million, respectively.
According to Kathy Jo Van, group vice president of Coleman Cable’s electrical group, the company did a private placement of equity in October, with subsequent registration rights and on March 1 the company’s stock began trading on the NASDAQ. The company’s stock is trading under the symbol CCIX.
At press time it was trading at approximately $16 per share.
Being public helps Coleman Cable in a number of ways, she said. “It allows us to pay down some of the debt that we had, and some of the owners of the company were able to get some equity out of their investment. It certainly makes us much more viable in the market in terms of generating future cash, based on us driving stock price. And the fourth part is demonstrated by the Copperfield intended acquisition. It really gives us an ability to go and do some of these acquisitions that we have wanted to do in the past, but just weren’t in a position to really be able to pull them off.”
The acquisition would broaden the scope of Coleman Cable’s product offering, further strengthen its strategic relationships with industrial distributors and increase Coleman’s end-market diversity. “After the Copperfield acquisition is finalized, I think you will see a lot more activity out of us,” said Van.
“Copperfield is an excellent strategic fit and a logical step in the continued growth and development of our business,” said Gary Yetman, CEO of Coleman Cable. “This transaction represents a unique opportunity to acquire a preeminent industry player and seasoned management team that will significantly enhance Coleman Cable’s position as a leading provider of wire and cable products in numerous niche industrial end markets.”
Richard Carr, Copperfield’s CEO, and Mike Frigo, Copperfield’s COO, will continue their roles with the new company.
John Myers, a wire and cable industry consultant who for years was a senior executive for Houston Wire and Cable said, “The product lines of Copperfield LLC look like a great fit for Coleman Cable, and it will be an easy fit into Coleman’s existing business. I like the acquisition a lot and the price looks good. Coleman is a well-run business with a great management team.”
Coleman Cable has three business units: electrical/wire and cable distributors; specialty distributors and OEMs; and consumer outlets. It reported net sales for the nine months ended Sept. 30, 2006, of $320.1 million, an increase of $68.8 million or 27.4 percent, over the same period in 2005. Net sales for the company’s electrical/wire and cable distributors segment for that same time period were $111.4 million. The company’s electrical/wire and cable distributors segment, the specialty distributors and OEM segment and the consumer outlets segment represented approximately 34.8 percent, 67.4 percent and 14.2 percent of the company’s net sales, respectively.
The company markets its products under several brands and trademarks, including Baron, Signal, Polar Solar, Royal, Road Power and Seoprene.