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Industrials & Manufacturing Industry Insight November 2018 Industrials & Manufacturing Industry Insight | November 2018 Industrials & Manufacturing Industry Update
Industrials & Manufacturing categories continue to see strong M&A activity
So far in 2018, strategic buyers accounted for 89% of the Industrials and Manufacturing M&A transactions with financial buyers making up the difference; during 2017, strategic buyers accounted for approximately 90% of the transactions.
Select Recent Notable Publicly Announced M&A Transactions
Transaction Date Status Target Buyer Size 11/7/2018
Oct-2018 Announced $19.7 billion
Oct-2018 Announced $4.4 billion
Aug-2018 Announced $6.8 billion
Aug-2018 Announced $6.8 billion
Jul-2018 Announced $3.6 billion
www.peakstone.com 1 Industrials & Manufacturing Industry Insight | November 2018 U.S. Industrials & Manufacturing Industry - M&A Market Overview
Industrials & Manufacturing M&A market has seen moderate activity
Industrials & Manufacturing Transactions by Buyer Type Industrials & Manufacturing Transaction Multiples
10.8x 9.3x 10.0x 9.4x 8.6x 134 8.6x 8.3x 8.1x 109 91 55 41
37 30
28 414 378 369 371 355 289 263 218 1.2x 1.2x 1.0x 0.9x 0.9x 0.9x 1.0x 1.0x
2011 2012 2013 2014 2015 2016 2017 2018 YTD 2011 2012 2013 2014 2015 2016 2017 2018 YTD
EV / EBITDA EV / Revenue Strategic Financial
Source: Capital IQ, as of November, 2018. Note: Only includes transactions with total transaction value greater than $1.0 M
www.peakstone.com 2 Industrials & Manufacturing Industry Insight | November 2018 Peakstone Industrials & Manufacturing Index – Trading Statistics Industrials & Manufacturing indexes have performed in line with the S&P 500 Relative Stock Performance – Group 1
120%
100%
80%
Professional & Commercial Services: 76% 60% Aerospace & Defense: 73%
40% S&P 500: 57% Building Products: 54% 20% Automotive & Components: -4%
0% Peakstone Index Company details on pages 7-9
-20%
-40%
Source: Capital IQ, as of November, 2018.
www.peakstone.com 3 Industrials & Manufacturing Industry Insight | November 2018 Peakstone Industrials & Manufacturing Index – Trading Statistics (cont.) Industrials & Manufacturing indexes have performed in line with the S&P 500 Comparable Valuation Trends – Enterprise Value/EBITDA – Group 1
18.0x
16.0x
14.0x
12.0x Aerospace & Defense: 13.3x S&P 500: 12.0x 10.0x Professional & Commercial Services: 11.2x
8.0x Building Products: 9.7x Automotive & Components: 5.7x 6.0x
4.0x Peakstone Index Company details on pages 7-9
2.0x
0.0x
Source: Capital IQ, as of November, 2018.
www.peakstone.com 4 Industrials & Manufacturing Industry Insight | November 2018 Peakstone Industrials & Manufacturing Index – Trading Statistics (cont.) Industrials & Manufacturing indexes have performed in line with the S&P 500 Relative Stock Performance – Group 2
120%
100%
80%
60% Machinery: 62% S&P 500: 57% 40% Construction & Engineering: 42% Trading & Distribution: 10% 20% Electrical Equipment: 6%
0% Peakstone Index Company details on pages 7-9
-20%
-40%
Source: Capital IQ, as of November, 2018.
www.peakstone.com 5 Industrials & Manufacturing Industry Insight | November 2018 Peakstone Industrials & Manufacturing Index – Trading Statistics (cont.) Industrials & Manufacturing indexes have performed in line with the S&P 500 Comparable Valuation Trends – Enterprise Value/EBITDA – Group 2
18.0x
16.0x
14.0x Electrical Equipment: 13.5x
12.0x S&P 500: 12.0x Machinery: 10.7x 10.0x Trading & Distribution: 10.4x Construction & Engineering: 8.8x 8.0x
6.0x
4.0x Peakstone Index Company details on pages 7-9
2.0x
0.0x
Source: Capital IQ, as of November, 2018.
www.peakstone.com 6 Industrials & Manufacturing Industry Insight | November 2018 Public Trading Comparables by Sector
Select Industrials & Manufacturing Public Trading Comparables
($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin %
Aerospace & Defense The Boeing Company $208,113 $210,079 2.2x 16.7x 20.1x 21.1x 19% 13% United Technologies Corporation $102,478 $130,891 2.0x 12.3x 15.8x 17.2x 26% 17% Honeywell International Inc. $109,896 $116,678 2.7x 13.0x 14.8x 19.3x 32% 21% Lockheed Martin Corporation $87,194 $101,082 1.9x 13.3x 15.5x 16.3x 12% 13% General Dynamics Corporation $53,958 $66,029 1.9x 13.5x 15.6x 15.4x 19% 14% Northrop Grumman Corporation $49,089 $62,766 2.2x 13.3x 15.6x 16.2x 23% 17% Raytheon Company $52,590 $56,130 2.1x 15.2x 17.5x 16.2x 25% 14% Aerospace & Defense Median $87,194 $101,082 2.1x 13.3x 15.6x 16.3x 23% 14% 0 Automotive & Components Ford Motor Company $37,949 $167,903 1.1x 11.8x 27.9x 7.0x 9% 9% General Motors Company $51,460 $137,976 0.9x 6.1x 13.0x 6.2x 12% 14% The Goodyear Tire & Rubber Company $5,194 $11,018 0.7x 5.5x 9.1x 7.7x 23% 13% BorgWarner Inc. $8,327 $10,205 1.0x 5.7x 7.5x 8.7x 21% 16% Lear Corporation $8,911 $9,972 0.5x 4.3x 5.4x 7.7x 12% 11% Automotive & Components Median $8,911 $11,018 0.9x 5.7x 9.1x 7.7x 12% 13% 0 Building Products Masco Corporation $9,599 $12,174 1.5x 9.4x 10.6x 11.7x 32% 16% Lennox International Inc. $8,568 $9,648 2.5x 16.1x 18.1x 20.4x 29% 15% Fortune Brands Home & Security, Inc. $6,429 $8,554 1.6x 10.1x 12.0x 12.0x 36% 16% USG Corporation $5,983 $6,672 2.0x 12.9x 18.0x 19.4x 19% 14% JELD-WEN Holding, Inc. $1,788 $3,169 0.8x 8.7x 12.3x 8.8x 21% 9% Universal Forest Products, Inc. $1,777 $1,953 0.4x 7.7x 10.0x 10.7x 13% 6% Building Products Median $6,206 $7,613 1.5x 9.7x 12.2x 11.9x 25% 14%
Source: Capital IQ, as of November, 2018.
www.peakstone.com 7 Industrials & Manufacturing Industry Insight | November 2018 Public Trading Comparables by Sector (cont.)
Select Industrials & Manufacturing Public Trading Comparables
($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin %
Professional & Commercial Services Waste Management, Inc. $37,446 $47,381 3.2x 11.6x 17.9x 20.3x 38% 28% Republic Services, Inc. $23,470 $31,641 3.1x 11.4x 19.2x 22.6x 38% 28% Cintas Corporation $19,284 $21,706 3.3x 16.3x 20.7x 24.3x 45% 20% ManpowerGroup Inc. $5,156 $5,637 0.3x 6.0x 6.6x 9.8x 16% 4% Essendant Inc. $479 $967 0.2x 11.0x 21.1x 12.1x 14% 2% Kelly Services, Inc. $958 $925 0.2x 8.0x 10.3x 10.9x 18% 2% Professional & Commercial Services Median $12,220 $13,671 1.7x 11.2x 18.5x 16.2x 28% 12% 0 Construction & Engineering Jacobs Engineering Group Inc. $11,286 $12,894 1.0x 13.6x 16.8x 15.4x 19% 7% AECOM $5,256 $8,517 0.4x 10.2x 14.6x 10.9x 3% 4% Fluor Corporation $6,776 $6,734 0.3x 8.9x 12.6x 16.9x 4% 4% Quanta Services, Inc. $5,197 $6,061 0.6x 8.3x 12.4x 10.6x 13% 7% MasTec, Inc. $3,724 $5,430 0.8x 8.6x 12.8x 12.0x 13% 9% EMCOR Group, Inc. $4,281 $4,228 0.5x 8.8x 10.6x 14.5x 15% 6% Construction & Engineering Median $5,226 $6,397 0.6x 8.8x 12.7x 13.2x 13% 7% 0 Trading & Distribution United Rentals, Inc. $10,524 $20,537 2.7x 9.0x 10.2x 7.1x 43% 30% W.W. Grainger, Inc. $16,197 $18,077 1.6x 11.5x 13.9x 16.6x 39% 14% HD Supply Holdings, Inc. $7,140 $9,097 1.6x 12.0x 13.5x 11.0x 39% 14% Univar Inc. $3,144 $5,668 0.7x 9.2x 13.1x 12.7x 22% 7% WESCO International, Inc. $2,521 $3,664 0.4x 9.2x 10.6x 10.1x 19% 5% Veritiv Corporation $461 $1,420 0.2x 14.0x 22.7x 6.4x 18% 1% Trading & Distribution Median $5,142 $7,382 1.1x 10.4x 13.3x 10.5x 30% 10%
Source: Capital IQ, as of November, 2018.
www.peakstone.com 8 Industrials & Manufacturing Industry Insight | November 2018 Public Trading Comparables by Sector (cont.)
Select Industrials & Manufacturing Public Trading Comparables
($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin %
Electrical Equipment Emerson Electric Co. $44,326 $47,993 2.8x 13.5x 16.5x 18.9x 43% 21% Rockwell Automation Inc. $21,809 $21,548 3.2x 13.7x 15.3x 20.3x 43% 24% AMETEK, Inc. $17,325 $18,708 4.0x 15.1x 18.0x 21.3x 34% 26% Hubbell Incorporated $6,003 $7,703 1.8x 10.6x 13.0x 14.6x 30% 17% Acuity Brands, Inc. $5,252 $5,480 1.5x 10.0x 11.7x 14.1x 41% 15% Electrical Equipment Median $6,571 $8,400 1.6x 11.1x 13.4x 13.4x 37% 15% 0 Machinery General Electric Company $81,936 $200,194 1.6x 33.4x NM 11.5x 12% 5% Caterpillar Inc. $76,319 $104,946 2.0x 9.5x 12.8x 10.4x 28% 21% Deere & Company $46,794 $86,631 2.4x 15.9x 23.6x 13.1x 23% 15% Illinois Tool Works Inc. $43,698 $49,517 3.3x 12.2x 13.8x 16.6x 42% 27% PACCAR Inc $20,742 $26,566 1.2x 8.6x 10.2x 9.5x 15% 14% Parker-Hannifin Corporation $22,136 $26,259 1.8x 10.4x 12.7x 14.3x 25% 17% Cummins Inc. $23,226 $25,153 1.1x 7.6x 9.3x 9.4x 24% 13% Stanley Black & Decker, Inc. $18,985 $24,611 1.8x 11.0x 14.3x 15.2x 36% 16% Electrical Equipment Median $17,325 $20,537 1.6x 11.0x 13.3x 13.1x 30% 15% 0 Total Industrials and Manufacturing Median $11,286 $18,077 1.6x 11.0x 13.6x 13.1x 23% 14%
Source: Capital IQ, as of November, 2018.
www.peakstone.com 9 Industrials & Manufacturing Industry Insight | November 2018 Selected Industrials & Manufacturing Industry Transactions
Selected Industrials & Manufacturing Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
Quad/Graphics, Inc. (NYSE:QUAD) entered into a definitive agreement to acquire LSC Communications, Inc. Quad/Graphics, Inc. 10/31/2018 $1,426 4.9x LSC Communications, Inc. (NYSE:LKSD) for approximately $480 million on October (NYSE:LKSD) (NYSE:QUAD) 30, 2018.
EnerSys (NYSE:ENS) entered into a share purchase agreement to acquire Alpha Alpha Technologies Services, 10/29/2018 $750 EnerSys (NYSE:ENS) 11.2x Technologies Services, Inc. and Alpha Technologies Ltd. from AlphaTec Ltd., Radiant Inc./Alpha Technologies Ltd. Energy Systems, Inc. and Alpha Innovations Ltd.
ITE Management LP (through its fund ITE Rail Fund LP) entered into a definitive American Railcar Industries, 10/22/2018 $1,873 ITE Management LP 13.4x agreement to acquire American Railcar Industries Inc. (NASDAQ:ARII) (‘ARI’) from Inc. (NasdaqGS:ARII) Icahn Enterprises LP (NasdaqGS:IEP).
Sentinel Energy Services Inc. (NASDAQ:STNL) ("Sentinel") entered into a definitive Sentinel Energy Services Inc. agreement to acquire a majority stake in Strike Capital LLC from OEP Capital 10/19/2018 Strike Capital LLC $426 - (NasdaqCM:STNL) Advisors LP (‘OEP’) and other shareholders for approximately $430 million on October 18, 2018.
Harris Corporation (NYSE:HRS) entered into a merger agreement to acquire L3 L3 Technologies, Inc. 10/14/2018 $19,723 Harris Corporation (NYSE:HRS) 13.8x Technologies, Inc. (NYSE:LLL) for $16.1 billion in a merger of equals transaction on (NYSE:LLL) October 12, 2018.
TransDigm Group Incorporated (NYSE:TDG) entered into definitive agreement to Esterline Technologies TransDigm Group 10/10/2018 $4,425 14.7x acquire Esterline Technologies Corporation (NYSE:ESL) for $3.6 billion on October 9, Corporation (NYSE:ESL) Incorporated (NYSE:TDG) 2018.
Citizen Engagement Centers MAXIMUS Federal Services, Inc. entered into a definitive asset purchase agreement MAXIMUS Federal Services, 10/09/2018 of General Dynamics $400 - to acquire Citizen Engagement Centers of General Dynamics Information Inc. Information Technology, Inc. Technology, Inc. for $400 million on October 5, 2018.
Source: Capital IQ, as of November, 2018.
www.peakstone.com 10 Industrials & Manufacturing Industry Insight | November 2018 Selected Industrials & Manufacturing Industry Transactions (cont.)
Selected Industrials & Manufacturing Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
Anchorage Municipal Light & Power, Inc. agreed to acquire all of the assets of All of the Assets of Municipal Chugach Electric Association, 09/28/2018 $768 - Municipal Light & Power, Inc. for approximately $770 million on September 28, Light & Power, Inc. Inc. 2018. As consideration, Chugach will make a cash payment of $767.8 million.
CIE Automotive, S.A. (BME:CIE) entered into a definitive agreement to acquire roof Roof Systems Business of CIE Automotive, S.A. 09/17/2018 $760 - systems business from Inteva Products, LLC for €650 million on September 17, 2018. Inteva Products Inc. (BME:CIE) The transaction is expected to close during the first semester in 2019.
Univar Inc. (NYSE:UNVR) entered into an agreement to acquire Nexeo Solutions, Nexeo Solutions, Inc. 09/17/2018 $1,907 Univar Inc. (NYSE:UNVR) 9.5x Inc. (NasdaqCM:NXEO) from a consortium of sellers for $1 billion on September 17, (NasdaqCM:NXEO) 2018.
Vision Technologies Aerospace Incorporated entered into a conditional Vision Technologies 09/13/2018 MRA Systems, LLC $630 10.0x membership interest purchase agreement to acquire MRA Systems, LLC from Aerospace Incorporated General Electric Company (NYSE:GE) for $630 million on September 13, 2018.
Science Applications Science Applications International Corporation (NYSE:SAIC) entered into a definitive Engility Holdings, Inc. 09/10/2018 $2,490 International Corporation 13.7x agreement to acquire Engility Holdings, Inc. (NYSE:EGL) from Birch Partners, LP and (NYSE:EGL) (NYSE:SAIC) others for $1.6 billion on September 9, 2018.
Concrete Pumping Holdings Industrea Acquisition Corp. Industrea Acquisition Corp. (NasdaqCM:INDU) entered into a definitive agreement 09/07/2018 $610 8.0x Acquisition Corp. (NasdaqCM:INDU) to acquire Concrete Pumping Holdings, Inc.
Spartan Paper LLC entered into a definitive agreement to acquire Specialty Papers Specialty Papers Business Unit 08/21/2018 $360 Pixelle Specialty Solutions LLC 11.9x business unit from P. H. Glatfelter Company (NYSE:GLT) for $360 million on August of P. H. Glatfelter Company 21, 2018.
Source: Capital IQ, as of November, 2018.
www.peakstone.com 11 Industrials & Manufacturing Industry Insight | November 2018 Selected Industrials & Manufacturing Industry Transactions (cont.)
Selected Industrials & Manufacturing Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
Methode Electronics, Inc. (NYSE:MEI) entered into an agreement to acquire Grakon Methode Electronics, Inc. 08/20/2018 Grakon Parent, Inc. $420 10.2x Parent, Inc. from Industrial Growth Partners and others for $420 million on August (NYSE:MEI) 20, 2018.
Cannae Holdings, Inc. (NYSE:CNNE), CC Capital Management, LLC, Funds affiliated Thomas H. Lee Partners, L.P.; The Dun & Bradstreet with Thomas H. Lee Partners, L.P., Qatar Investment Authority and certain other 08/08/2018 $6,875 Qatar Investment Authority; 12.5x Corporation (NYSE:DNB) investors entered into a definitive agreement to acquire The Dun & Bradstreet Cannae Holdings, Inc. Corporation (NYSE:DNB) for $5.5 billion on August 8, 2018.
Paladin Brands, LLC/Genesis Stanley Black & Decker, Inc. (NYSE:SWK) entered into a definitive agreement to Stanley Black & Decker, Inc. 08/07/2018 Attachments, LLC/Pengo $690 - acquire Paladin Brands, LLC, Genesis Attachments, LLC and Pengo Corporation from (NYSE:SWK) Corporation International Equipment Solutions, LLC for $690 million in cash on August 7, 2018.
Bemis Company, Inc. Amcor Limited (ASX:AMC) ('Amcor') entered into a definitive agreement to acquire 08/06/2018 $6,875 Amcor Limited (ASX:AMC) 11.9x (NYSE:BMS) Bemis Company, Inc. (NYSE:BMS) ('Bemis') for $5.3 billion on August 6, 2018.
Intertek Group plc (LSE:ITRK) agreed to acquire Alchemy Investment Holdings, Inc. 08/03/2018 Alchemy Systems, LP $480 Intertek Group plc (LSE:ITRK) - from The Riverside Company and others for $480 million on August 3, 2018.
WSP Global Inc. (TSX:WSP) entered into an agreement to acquire Berger Group 07/30/2018 Berger Group Holdings, Inc. $400 WSP Global Inc. (TSX:WSP) 8.9x Holdings, Inc. for $400 million on July 28, 2018. WSP Global intends to restructure international operations of Berger Group Holdings.
PGT Innovations, Inc. (NYSE:PGTI) entered into a definitive merger agreement to PGT Innovations, Inc. 07/24/2018 WWS Acquisition, LLC $360 19.2x acquire WWS Acquisition, LLC from a consortium of sellers for $360 million on July (NYSE:PGTI) 24, 2018.
Source: Capital IQ, as of November, 2018.
www.peakstone.com 12 Industrials & Manufacturing Industry Insight | November 2018 Selected Industrials & Manufacturing Industry Transactions (cont.)
Selected Industrials & Manufacturing Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
Ahlstrom Munksjo Oyj signed a definitive agreement to acquire Expera Specialty Expera Specialty Solutions, 07/23/2018 $615 Ahlstrom Munksjo Oyj 9.3x Solutions, LLC from KPS Capital Partners, LP for approximately $620 million on July LLC 23, 2018.
Asahi Kasei Corporation (TSE:3407) entered into a definitive agreement to acquire Sage Automotive Interiors, Asahi Kasei Corporation 07/19/2018 $1,060 - Sage Automotive Interiors, Inc. from Clearlake Capital Group, L.P. for $1.1 billion on Inc. (TSE:3407) July 19, 2018.
NCI Building Systems, Inc. (NYSE:NCS) entered into an agreement and plan of NCI Building Systems, Inc. 07/17/2018 Ply Gem Parent, LLC $3,606 - merger to acquire Ply Gem Parent, LLC from Clayton, Dubilier & Rice, Inc., Golden (NYSE:NCS) Gate Private Equity, Inc and others for $3.6 billion on July 17, 2018.
Allied Universal agreed to acquire U.S. Security Associates, Inc. from Goldman Sachs 07/16/2018 U.S. Security Associates, Inc. $1,000 Allied Universal 10.5x Group, Merchant Banking Division and others for $1 billion on July 16, 2018.
National Storage Affiliates Heitman America Real Estate Trust, LLC entered into an interest purchase Portfolio of 112 self-storage 07/10/2018 $1,325 Trust (NYSE:NSA); Heitman - agreement to acquire portfolio of 112 self-storage properties from Simply Storage properties America Real Estate Trust, LLC Management, LLC for $1.3 billion on May 21, 2018.
Global Marine and Mobile Mercury Marine Inc. entered into a definitive agreement to acquire Global Marine 06/29/2018 Division of Power Products, $910 Mercury Marine, Inc. - & Mobile business from Power Products, LLC for approximately $910 million on LLC June 28, 2018.
Kongsberg Gruppen ASA (OB:KOG) entered into an agreement to acquire Rolls- Rolls-Royce Commercial Kongsberg Gruppen ASA 06/28/2018 $655 - Royce Commercial Marine Inc. from Rolls-Royce plc for £500 million on June 28, Marine Inc. (OB:KOG) 2018.
Source: Capital IQ, as of November, 2018.
www.peakstone.com 13 Industrials & Manufacturing Industry Insight | November 2018 Peakstone Momentum
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www.peakstone.com 14 Industrials & Manufacturing Industry Insight | November 2018 Contact Us
About Peakstone
Peakstone is an investment bank that specializes in mergers and acquisitions advisory and capital raising for middle market clients. Our team is comprised of senior investment banking professionals who have decades of experience and have executed hundreds of transactions totaling billions of dollars. For additional information, visit www.peakstone.com.
Contact Alex Fridman Shreyas Venkatasubramaniam Managing Director Analyst [email protected] [email protected] 312-204-7300 312-204-7347
www.peakstone.com 15