Sensata Technologies Holding N.V. (NYSE: ST) announced today that its wholly owned indirect subsidiary Sensata Technologies B.V. has reached agreement to acquire the Schrader group of companies from Madison Dearborn Partners, LLC for a total enterprise value of $1.0 billion. Schrader is the global leader in tire pressure monitoring sensors (TPMS). The transaction provides TPMS and additional low pressure sensing capabilities that address large and fast growing sensing markets and adds to Sensata's industry-leading sensing position. The transaction is subject to regulatory approval and is expected to close during the fourth quarter of 2014.
Schrader is headquartered in Denver, Colorado and has sales and engineering offices in the United States, the United Kingdom, Germany, China, Japan and South Korea. Manufacturing facilities are located in the United States, United Kingdom, France, Brazil and China. Schrader employs 2,500 people globally, including over 300 engineers. Schrader is expected to generate approximately $550 million in revenue in 2014.
Schrader pioneered TPMS for global OEMs, a safety feature now standard on all cars in North America and growing globally in Europe and Asia. Fuel economy and safety regulations in each region are driving the rapid adoption of TPMS and Schrader has obtained over 50% market share in these regions.
"The acquisition of Schrader extends Sensata's leadership position in pressure sensing and provides further access to a rapidly growing $2 billion low pressure sensor market where the largest current opportunity is in TPMS," said Martha Sullivan, Sensata Technologies President and Chief Executive Officer. "Additionally, Schrader's expertise in MEMS sensing, wireless communications and ASIC design will be highly complementary; we are excited to welcome this talented team into Sensata's global organization."
"Today is an exciting day as we move into the next phase in the evolution of Schrader. The addition of Schrader to Sensata's product portfolio makes sense strategically and operationally; we are aligned on our plans to continue to grow the business," said Hugh Charvat, Schrader Chairman, President and Chief Executive Officer. "I would like to thank Madison Dearborn Partners for their partnership over the past few years. Their commitment and advice have helped us surpass our ambitious goals."
"The purchase price represents less than a 10x multiple on estimated 2015 stand-alone EBITDA," added Paul Vasington, Sensata Technologies Chief Financial Officer. "While we expect Schrader to be $0.13 to $0.16 dilutive to adjusted earnings per share in 2014, we expect Schrader to be $0.18 to $0.21 accretive in 2015, provide $0.50 to $0.55 of accretion after integration and debt pay-down and provide an additional $0.18 to $0.22 accretion when China ramps adoption of TPMS."
Barclays Bank PLC and Morgan Stanley Senior Funding, Inc. have committed to provide debt financing to support the transaction. Centerview Partners acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Sensata Technologies. Barclays, Citigroup and Guggenheim Securities, LLC acted as financial advisors and Kirkland & Ellis LLP acted as legal advisor to Schrader International.