Onex sells Husky to Berkshire, Canadian pension fund

For the second time in less than four years, Husky Injection Molding Systems has been sold, once again shifting ownership after the company spent more than half a century under its former owner and founder, Robert Schad. The maker of injection molding machines, hot runners, and molds has been sold by Onex Corp., which purchased it in a stock buyout from Schad in December 2007, to Boston-based private equity firm Berkshire Partners and Canadian pension fund OMERS Private Equity for $2.1 billion.

A OMERS spokesperson told PlasticsToday that in terms of the ownership split between it and Berkshire, both companies would invest equal amounts in Husky. A Husky spokesperson said that at this time, no changes to Husky's management or overall personnel have been announced. Company employees were informed of the move on May 3 via a message from current president and CEO, John Galt.

Onex said it acquired Husky for an equity investment of approximately $622 million in 2007, while other reports pegged the number at $966 million. Once the deal with Berkshire and OMERS is complete, the Canadian private equity firm says it will bank net proceeds of $1.8 billion on its investment in Husky, including a prior $98 million distribution. The end result will be a multiple of invested capital of approximately 2.9 times and a 36% rate of return. Onex says its portion of the net proceeds from this sale would be approximately $635 million, including carried interest.

Onex reported that Husky's operating profit has more than doubled since it acquired the company as a result of its transformation plan. That plan was described as including waste reduction, shedding of non-core and non-performing assets, and re-investment in "better solutions and services to our core market customers."

That transformation effort included the company’s decision in 2009 to cease manufacture of large molding machines for the automotive market and the recent acquisition of Austrian closure moldmaker KTW. In 2007, just before Onex acquired it, Husky had purchased the assets of Moldflow Corp.’s Manufacturing Solutions Division for $7 million. This included the Altanium temperature controllers, Celltrack and Shotscope software products, as well as Moldflow Plastics Expert (MPX), an automated process set-up and optimization tool. In January 2004, Moldflow acquired the line of Altanium temperature controllers by purchasing its creator, American MSI.

Anthony Munk, a managing director of Onex, noted that the company's strong performance came in spite of the global economic issues of the last few years. "This is an extraordinary accomplishment given the operating environment that this business faced since we acquired it in late 2007," Munk said.

In its 2010 annual report, Onex said Husky's 2010 revenues increased 10%, or $101 million, to $1.1 billion. That growth was driven by higher sales in Latin America ($50 million), Asia Pacific ($42 million), and Europe ($11 million), which offset lower sales in North America ($2 million) and unfavorable foreign currency changes on Euro-denominated revenues of $9 million.

Husky's fourth-quarter 2010 revenues rose 20%, or $55 million, over the same quarter in 2009, with higher revenues in all of its geographic segments. The most significant revenue growth came from the Latin American ($18 million), Asia Pacific ($17 million), and European ($11 million) segments. 

Reuters broke the news that Berkshire was interested in Husky on April 19. Founded in 1984, Berkshire's Fund I generated $59 million in total capital. Its most recent fund, Berkshire Fund VII, started up in 2006, with $3.1 billion in cash that it is still investing. Fund VII's largest group of investors are university endowments, at 30%, followed by pensions (17%), and foundations (15%). Overall, Berkshire Partners has $6.5 billion of private equity capital spread among its seven investment funds.

OMERS Private Equity manages the private equity activities of OMERS, with more than $5.5 billion in investments under management. OMERS is one of Canada's largest pension funds with more than $53 billion in net assets. 

 

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