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Invensys plc, London, England, has agreed to sell its U.S.-based power transmission business, Rexnord Corp., to The Carlyle Group, a U.S. private equity firm, for a gross consideration of US$913 million, less $33 million in respect of working capital, giving net proceeds of $880 million. In related news, as part of its divesture program, Invensys also has agreed to sell its Drive Systems business to NewCo (Eastern) Ltd, a company formed by the management team of Invensys Drive Systems and their investment partner Compass Partners European Equity Fund, L.P., for a cash consideration of US$145 million.
Rexnord Corp., Milwaukee, WI, is a global supplier of power transmission components, conveying equipment, bearings, chains, couplings, drives, motor brakes and idlers. For the twelve months ended Mar. 31, 2002, the business generated revenues of US$724 million and operating profit of US$104 million. Net assets, which are the subject of the transaction, are approximately US$410 million. Goodwill written off to reserves, relating to the businesses being sold, amounts to approximately US$860 million. The impact on Group shareholders' funds will be an increase of approximately $470 million.
The sale of Rexnord is consistent with Invensys' previously stated objectives to divest non-core assets as part of its overall plan to improve capital strength and increase strategic focus. The transaction is expected to complete by the end of November 2002 and is subject to customary regulatory approvals and the completion of financing by The Carlyle Group.
Rexnord has 5,000 employees located at 30 manufacturing facilities worldwide. Rexnord products are sold around the world by over 200 direct sales representatives through a network of multiple service centers and warehouses backed by hundreds of independent distributors.
The Carlyle Group is a global private equity firm with more than $13.5 billion under management. Carlyle invests in buyouts, real estate, high yield, and venture in the U.S., Europe, Japan, and Asia, focusing on aerospace and defense, consumer, industrial, energy, healthcare, technology, and telecommunications and media. Since 1987, the firm has invested $6.8 billion and achieved a realized internal rate of return of 36 percent. The Carlyle Group employs 491 people in 11 countries.
Drive Systems sale
In related news, as part of its divesture program, Invensys also has agreed to sell its Drive Systems business to NewCo (Eastern) Ltd, a company formed by the management team of Invensys Drive Systems and their investment partner Compass Partners European Equity Fund, L.P., for a cash consideration of US$145 million.
Drive Systems is a global supplier of AC inverters, DC drives, Servo and Vector controllers with 900 employees. For the twelve months ending Mar. 31, 2002, the business generated revenues of US$115 million and operating profit of US$20 million. Net operating assets which are the subject of the transaction are approximately US$40 million. Goodwill totals $US158 million (of which US$31 million is already written off to reserves) and relates primarily to the acquisition of Eurotherm plc in 1998.