Kaman to Sell Distribution Segment

BLOOMFIELD, Conn. — Kaman Corporation announced that it has entered into a definitive agreement to sell its Distribution segment to affiliates of Littlejohn & Co., LLC (Littlejohn) for total cash consideration of $700 million subject to customary closing conditions and working capital adjustments. The transaction value represents a multiple of 10.4 times trailing twelve-month (TTM) Segment Adjusted EBITDA* for the Distribution segment.

Following the completion of the transaction, Kaman will continue to design and manufacture critical components, structures, and systems for commercial and military customers. The Aerospace Segment currently operates out of fourteen facilities around the world with almost 3,000 employees and is expected to generate between $730 and $760 million of revenue in 2019.

“For Kaman this transaction represents an important milestone in our portfolio transformation and the culmination of a thorough strategic review undertaken by our Board of Directors,” said Neal J. Keating, Chairman, President and CEO. “Our strengthened balance sheet will better position the Company to invest in and build our higher margin, higher growth aerospace and engineered products businesses to enhance shareholder value.”

Kaman’s Distribution Segment is a leading distributor of more than six million items including electro-mechanical, bearings, power transmission, motion control and electrical and fluid power components, as well as automation and MRO supplies, to customers in virtually every industry. In addition, the business provides engineering, design and support for automation, electrical, linear, hydraulic and pneumatic systems as well as belting and rubber fabrication, customized mechanical services, hose assemblies, repair, fluid analysis and motor management. With approximately 220 locations across the U.S. and Puerto Rico, Distribution’s 2,200 employees generated $1.1 billionin net revenue in 2018.

“Kaman Distribution builds upon Littlejohn’s deep expertise investing in the distribution and industrial sectors,” said Tony Miranda, Managing Director of Littlejohn. “We have long admired Kaman Distribution, a market-leading provider of products and solutions to its customers as well as a trusted partner to its suppliers, and look forward to working closely with management to further invest in the business and drive growth, both organically and via acquisition.”

Keating added, “Successful execution of our three platform strategy at Distribution has enabled us to drive sustainable long-term sales and profit growth. Under Littlejohn’s ownership, Distribution will continue its track record of providing value added products and services and capabilities to customers throughout the United States. We believe that, in addition to unlocking the value of Distribution for our shareholders, this transaction better positions Kaman for continued growth and enhanced profitability.”

Use of Proceeds
Kaman expects to receive approximately $600 million in net proceeds from the transaction. The Company will maintain its disciplined capital deployment strategy, allocating proceeds to pay down approximately $100 million of debt and accelerate internal development efforts. In addition, the Company will pursue strategic acquisitions focused on attractive engineered product end markets. Finally, Kaman remains committed to its well-established practice of returning capital to shareholders through its quarterly cash dividend and share repurchase program. The Company will provide further details about its capital allocation priorities and expectations for Aerospace performance, when it reports second quarter 2019 results in August.

Approvals and Time to Close
The transaction is expected to close in the third quarter of 2019, subject to customary closing conditions and the receipt of any necessary consents and approvals.

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