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Blackstone Agrees to Buy Gates Corp. for $5.4B

Private equity firm: 'It was a tough decision to sell Gates.'

Private equity funds managed by Blackstone have agreed to buy Gates Corp., a manufacturer of power transmission belts and fluid power products.

Blackstone will pay private equity firm Onex Corp. and Canada Pension Plan Investment Board about $5.4 billion for Gates.

Gates is a division of Tomkins, which Onex and CPPIB jointly acquired in 2010 for $5 billion. According to a news release, including the sale of Gates, the two organizations will have divested eight divisions of Tomkins for total proceeds of $7.9 billion.

Tomkins was a UK-listed industrial holding company operating general industrial, automotive and construction businesses globally.

“It was a tough decision to sell Gates. We don’t see many industrial businesses with its global brand recognition,” said Seth Mersky, a senior managing director of Onex.

Gates had sales of $2.9 billion for the year ended in September 2013.

According to Bloomberg, Blackstone is agreeing to pay 9.6 times EBITDA for the year ended in September, consistent with the median multiple for deals of more than $250 million.

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