The Eastern Co. (Naugatuck, CT) has acquired 100% of the outstanding shares of Big 3 Precision Products Inc. and Big 3 Precision Mold Services Inc. (Big 3 Precision; Centralia, IL) for $81.7 million from TVV Capital. Big 3 Precision is a leading provider of turnkey packaging solutions.
Through its two segments, Big 3 Precision serves diverse markets including automotive, plastic packaging, packaged consumer goods and pharmaceuticals. It works with manufacturers to design and produce custom returnable packaging to integrate with their assembly processes. Big 3 Precision Mold Services is a global leader in the design and manufacture of blow mold tools.
Based on its unaudited internal financial statements, Big 3 Precision generated sales of $72.2 million and had an adjusted EBITDA of $13.4 million for the 12 months ended June 30, 2019. Moreover, based on its audited financial statements, Big 3 Precision has posted double digit sales growth in each of the last five fiscal years.
“In acquiring Big 3 Precision, we are adding a substantial new growth business and moving Eastern closer to our long-term goal of generating $100 million in EBITDA. This transaction—our third acquisition in three years—represents another step toward our ambition of building a larger company that has a strong presence with key customers in key markets,” said August Viak, President and CEO of Eastern. “Consistent with our disciplined approach, this transaction checks the boxes of our stated acquisition criteria: Strong intrinsic economics, including an attractive margin profile and high cash flow generation; a robust business model in attractive niche markets we understand; and a committed and capable management team.
“We believe Big 3 Precision will become a strong contributor to our top line, earnings growth and cash flow,” Viak added. “Going forward, to create value from this investment, we intend to execute a multi-pronged plan that leverages Eastern’s management disciplines and operating approach; takes advantage of Eastern’s customer relationships to accelerate further market expansion; and expedites growth through bolt-on acquisitions. In addition, just as we significantly de-levered our balance sheet over two years, we intend to reduce the debt from this transaction expeditiously. We look forward to working with Todd Riley, Big 3 Precision’s President, and his strong team to achieve our shared operational and financial objectives,” said Viak.
The Eastern Co. is a 161-year-old manufacturer of custom-engineered components and products,, including industrial hardware, security products and metal castings. It operates from 18 locations in the U.S., Canada, Mexico, the UK, Taiwan and China. The broad range of Easterns’ products helps it to respond to changing requirements across diverse markets, including heavy and medium trucks, consumer packaged goods, mining, commercial laundry, electronics, military and other industrials.
Big 3 Precision Products offers design and fabrication services to create container and racking systems for the aerospace, truck, automotive, plastic, glass, fiberglass, military and SME industries. Solutions include packaging trays, bar dunnage, flipper dunnage, shipping trays, specialty pallets, dunnage trays and extend to complex steel racks and racking systems for products as diverse as airplane parts to automated automotive seat pallet systems. Big 3 Mold Services offers a full solution capability from product development, preform design and commissioning of production-ready tools for injection blow mold, ISBN, two-step blow mold and EBM methods.
“My colleagues at Big 3 Precision and I are enthusiastic about becoming a part of Eastern to fully capture the organic revenue and margin expansion potential in our businesses," commented Riley. "We are also excited about the opportunity to take advantage of the fragmented nature of our markets to augment Big 3 Precision through bolt-on acquisitions.”