Tower International, manufacturer of engineered automotive structural metal components and assemblies, has completed the sale of all of its European Operations to Financière SNOP Dunois S.A. (FSD), a privately owned French automotive supplier.
The purchase price represents an enterprise value of €255 million (approximately $288 million US), which represents an EV/Adjusted EBITDA multiple of 5.4x 2018 full year earnings.
“We are pleased to have completed the divestiture of Tower’s European operations at a valuation well above our current trading multiple,” said CEO Jim Gouin. “The divestiture reduces Tower’s net leverage to less than 1 times Adjusted EBITDA, giving Tower the flexibility to continue to profitably grow our business, maintain a conservative balance sheet and continue to return of capital to our shareholders. I would like to thank all of the colleagues from Tower Europe for their great contributions to Tower International over the years and wish them continued success as they become part of FSD.”
The divestiture resulted in net cash proceeds of approximately $250 million after payment of transaction costs and fees and the unwinding of the Euro denominated swaps related to Tower’s Term Loan. Following the closure of the transaction, Tower repaid $50 million of outstanding Term Loan B indebtedness. This repayment, coupled with Tower’s voluntary reduction to the Term Loan in July 2018 represent repayments totaling $100 million.
Gouin added, “Since 2014, Tower’s North American business has grown by more than 40 percent in a relatively flat production environment as we have benefitted from the industry’s shift from passenger cars to trucks and SUVs as well as OEM outsourcing. Tower is well-positioned to continue to benefit from these trends and current projections for full-year 2020 represent continued above market revenue growth, improved Adjusted EBITDA margins and significant free cash flow.”