Hubbell Inc., Orange, Conn., signed a definitive agreement to buy the Burndy connectors business from FCI Group for $360 million in cash. The addition of Burndy expands Hubbell’s offering in several markets, most significantly the market for high-voltage connectors and tooling for electric utility transmission and distribution operations.
Under the agreement, Hubbell and FCI parent Bain Capital are expected to close the deal by Oct. 1.
Burndy, based in Manchester, N.H., had revenues of $225 million in 2008, with operating margins “in the high teens,” according to a Hubbell press release. FCI said Burndy accounted for 12 percent of its total revenues that year. Utility customers account for 37 percent of Burndy’s sales with the other 63 percent split between construction and industrial markets. Geographically, Burndy does approximately 75 percent of its business in the U.S. and 25 percent in Canada, Brazil and Mexico.
Burndy operates three manufacturing facilities in the northeastern United States, one in Brazil and one in Mexico.
“We believe Burndy is an outstanding fit with Hubbell. We are very excited about adding Burndy’s high quality product line to our portfolio,” said Timothy Powers, Hubbell chairman, president and CEO. “Burndy has earned great respect over the years from distributors and end users and the brand is a natural complement to Hubbell’s positioning. We look forward to welcoming management and Burndy’s valued employees to the Hubbell family. Their emphasis on lean manufacturing and safety, as well as their strengths in engineering and customer service reinforce some of Hubbell’s core competencies. Financially, we expect Burndy to contribute to expanding our operating margin. We also expect to realize both sales and operating efficiencies as we integrate Burndy.”
Details on where Burndy would fit into Hubbell’s portfolio of brands and how the transition would affect the two companies’ independent reps were unavailable. Burndy has been a competitor with some Hubbell product lines, including primarily the Anderson brand that is part of Hubbell Power Systems.
Hubbell apparently was the winner among several suitors to approach FCI about acquiring Burndy. “As a result of the excellent performance of its electrical division, FCI had received many unsolicited offers over the years for its acquisition. Some of the recent offers were particularly attractive and deserved closer attention. Therefore, FCI top management decided to carefully study these proposals, which ended in the decision to divest the division,” said FCI’s press release.
FCI’s reasons for divesting the Burndy brand included a rethinking of the synergies among its various business operations, according to FCI Group chairman and chief executive Pierre Vareille. “The Electrical Division had the least synergies with the other divisions of FCI in terms of products and customers and we think that the combination with Hubbell will enhance the value creation opportunities for the Burndy brand.”