BLOOMFIELD, Conn. & FOOTHILL RANCH, Calif. — Kaman Corporation and Bal Seal Engineering, Inc. (“Bal Seal”) yesterday announced that they have entered into a definitive agreement under which Kaman will acquire Bal Seal for $330 million in cash, subject to customary adjustments for net debt and working capital.
Bal Seal has been a leader in the design, development, and manufacturing of precision springs, seals, and contacts for the last sixty years. With a strong platform of more than 240 patents across its proprietary manufacturing and material technologies, Bal Seal specializes in delivering critical components to customers in the medical technology, aerospace and defense, and industrial end markets. Bal Seal has an established global presence, with manufacturing, sales, and distribution operations across the U.S., Europe, and Asia, as well as additional resources around the world to ensure the quality and reliability of its products. For the full year 2019, Bal Seal expects revenues of approximately $95 million.
“Following the recent sale of our distribution business, Kaman’s strategic focus has centered on growing our highly engineered products business, enhancing margins, and driving free cash flow generation,” said Neal J. Keating, Chairman, President and CEO. “This complementary acquisition of Bal Seal will advance all three objectives by expanding the breadth of our product offering, increasing our exposure to attractive high growth markets, and driving meaningful near-term margin and cash flow accretion. We are especially excited to add the strong Bal Seal management team to our organization while leveraging their leading proprietary technology, breadth of products, and strong customer relationships.”
Rick Barnhart, President, Kaman Aerospace Group added, “Like Kaman, Bal Seal prides itself on its outstanding product quality, strong leadership and employee talent, and an unrelenting commitment to innovation. We believe our similar cultures and customer-centric approaches make our organizations an excellent and highly complementary match. We are excited for Bal Seal employees to join the Kaman team and work together to build strong alliances with our customers.”
“The combination of Bal Seal and Kaman represents a compelling opportunity for Bal Seal, our employees, and all our stakeholders,” said Rick Dawson, President and Chief Executive Officer of Bal Seal. “We look forward to leveraging Kaman’s scale, resources, and complementary capabilities to further extend our leadership positions and penetrate new markets with our combined offerings. We have known and respected the team at Kaman for many years and view them as ideal partners to help unlock the full potential of Bal Seal. We are excited to work closely with the Kaman team to ensure a smooth integration and capitalize on exciting new opportunities for growth.”
Strategic and Financial Benefits of the Transaction
- Establishes a Leading Engineered Products Provider: With a larger and even more extensive portfolio of engineered products and offerings, the combined company will be better able to serve customers across a range of critical applications. The combined company will leverage Kaman’s expertise in running a solutions-based business and Bal Seal’s proprietary manufacturing and material science technologies to enhance its engineered products business and add scale to its operations.
- Provides Access to New, High-Growth End Markets: The combined company will have broad exposure to attractive end markets with significant growth potential, including medical, industrial, and aerospace and defense. With Bal Seal, Kaman will have a strong position in the higher growth medical end market.
- Delivers Financial Benefits: The transaction is expected to be accretive to Kaman’s cash flow in the first year following the close of the transaction. The addition of the Bal Seal family of products to the Kaman portfolio of highly engineered products will be margin accretive. The purchase price, which Kaman will fund with cash on hand, values Bal Seal at 12.5x EBITDA, including estimated tax benefits and synergies.
A presentation providing an overview of the key transaction terms and strategic rationale has been posted to Kaman’s website at www.kaman.com/investors/presentations.Tagged with acquisition, Kaman