FountainVest agrees $920m sale of KSS to Chinese strategic
FountainVest Partners has agreed to sell Key Safety Systems (KSS), a US-based auto components manufacturer that it acquired in 2014, to Shanghai-listed Ningbo Joyson Electronic Corporation for $920 million.
The cash transaction should also facilitate an exit for Canada Pension Plan Investment Board (CPPIB), which co-invested in the deal alongside FountainVest, and Crestview Partners. US-based Crestview bought KSS alongside management in 2007 and then sold a majority stake to FountainVest. Both the PE firm and management retained minority interests in the business.
The valuation on acquisition in 2014 was reportedly $700-800 million. According to Debtwire, the deal was supported by $525 million in senior debt plus a $75 million revolving credit facility. KSS subsequently raised another $50 million in debt.
KSS' portfolio of automotive safety components and systems includes inflators, airbags, steering wheels and seat belts. They are used in more than 300 vehicle models produced by over 60 customers worldwide. Headquartered in Michigan, the company has 32 sales, engineering and manufacturing facilities. Its five main technical centers are located in the US, Germany, China, Japan and South Korea.
FountainVest acquired KSS for its growth prospects globally, but particularly in China. The merger with Joyson will create an automotive supplies business with pro forma combined worldwide sales of approximately $3 billion and 20,000 employees. KSS will continue to be headquartered in the US under the leadership of CEO Jason Luo.
Luo noted in a statement that, with FountainVest and Crestview's support, the company has expanded its addressable market and achieved compound annual revenue growth of 20%.
Other liquidity events for FountainVest in the last six months include a Hong Kong IPO for IMAX China and a reverse merger in Shenzhen for outdoor advertising business Focus Media, which was previously taken private by a PE consortium. There were partial exits in both cases.
The KSS transaction is expected to close in the first half of 2016.
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