Deals

KPS flips Ashcroft

New York-based KPS Special Situations has agreed to sell Ashcroft Holdings, unloading the company to Tokyo’s Nagano Keiki in a deal that will yield a 2x equity return.

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New York turnaround firm KPS Special Situations, after just four months of ownership, has agreed to sell the majority assets of thermometer and gauge manufacturer Ashcroft Holdings. Tokyo-based rival company Nagano Keiki is buying the business for $55 million (€45 million) in a deal that will generate a 2x equity return for KPS.

KPS originally acquired the assets for $34 million at the end of November. Ashcroft had formally been known as Dresser Instruments, but KPS carved the company out of Dresser Inc. and renamed it after one of its better known brands. The company is based in Stratford, Connecticut and manufactures pressure gauges, transducers, transmitters, and pressure and temperature switches. Ashcroft has operations in Brazil, Canada, Mexico and Singapore, and has also set up joint ventures in Saudi Arabia and Venezuela.

The sale to Nagano Keiki is expected to close in the second quarter.

We were able to double the company’s ‘run rate’ cash flow in less than sixty days.

Michael Psaros, managing principal, KPS Special Situations

The relatively short period of ownership might give the appearance that KPS is being opportunistic in the sale, but Michael Psaros, a managing principal at the firm, noted that the company was able to experience a substantial improvement under KPS’s watch.

KPS actually began working on its turnaround plan six months prior to the completion of the original acquisition. Once the firm finalised the purchase agreement, it then hit the ground running. KPS was able to generate savings by eliminating overhead and certain liabilities, and company management, led by John McKenna, pursued a number of restructuring initiatives.

“We were able to double the company’s ‘run rate’ cash flow in less than 60 days,” Psaros said.

Not included in the sale to Nagano Keiki is Ebro Electronics GmbH, the German assets that KPS acquired as part of the original Dresser Instruments acquisition. According to Psaros, Ebro’s business is unrelated to Ashcroft, which is why KPS is holding onto the company.

Psaros and KPS senior vice president Jay Bernstein led the investment for KPS.