Tower International, global manufacturer of engineered automotive structural metal components and assemblies, has entered into a stock purchase agreement (SPA) relating to the sale of all of its European Operations to Financière SNOP Dunois S.A. (FSD), a privately owned French automotive supplier. Tower says the SPA is substantially in the same form contemplated at the time that the Memorandum of Understanding was executed between Tower and FSD on Nov. 20.
The purchase price represents an enterprise value of €255 million (approximately $289 million US), which represents an EV/Adjusted EBITDA multiple of 5.4x 2018 full-year expected earnings.
“We are pleased to have executed the stock purchase agreement with FSD for the divestiture of Tower’s European operations. When completed, the divestiture will reduce Tower’s net leverage to less than 1 times Adjusted EBITDA, giving Tower the flexibility to continue to profitably grow our business while maintaining a conservative balance sheet and providing the opportunity for the return of capital to shareholders,” said CEO Jim Gouin. “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 and improved Adjusted EBITDA margins.”
Tower also has received Term Loan B lender consents and, subject to execution of definitive agreements intends to repay $50 million of outstanding Term Loan B indebtedness upon the closing of the transaction with FSD. This repayment, coupled with Tower’s voluntary reduction to the Term Loan in July of this year, would represent repayments totaling $100 million and reduce Tower’s Term Loan B to less than $260 million.
The closing of the sale transaction is expected to take place during the first quarter of 2019 and is subject to approval of the applicable antitrust authorities and certain other conditions.
