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Sunday, 28 September 2014 22:00

Deal to acquire GR Spring & Stamping positions Gill for growth, adds locations

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Richard Perreault Richard Perreault COURTESY PHOTO

As the automotive sector continues on the road to recovery, companies in the supply chain have looked for ways to add capacity, either through new facilities or by acquiring other suppliers.

The latter strategy led Grand Rapids-based Gill Industries Inc. to acquire Grand Rapids Spring & Stamping Inc. (GRS&S) in March. The deal brought together two long-time suppliers with a reach into myriad industries ranging from automotive to furniture to multi-use vehicles.

The two companies never directly competed with each other because of their differing capabilities and broad customer base, Gill CEO Richard Perreault told MiBiz. That meant the deal was more about gaining customers in growing markets and increasing global capacity than simply buying out a competitor.

“What this deal has done is added location for us,” Perreault said. “It added both a northern and southern location. The automotive trend is to grow more toward … Mexico, so that basically adds capacity for us in these growing regions.”

Gill’s move to gain new markets through acquisitions fits with the recent findings of global consultancy EY’s Capital Confidence Barometer of automotive executives, in which 61 percent of companies said gaining access to new product categories or geographies was a key driver of M&A activity.

In the acquisition of GRS&S, Gill gained a number of important global Tier 1 and OEM customers. Along the way, Perreault said his company worked closely with Grand Rapids Spring’s existing book of business to appease all possible stakeholders.

The complementary nature of the deal and the position it provides Gill Industries going forward led to the company being named a finalist in the MiBiz 2014 M&A Deals and Dealmakers of the Year Awards in the $10 million to $100 million category.

“Obviously, in any transaction, I’d like to say only the shareholders make the decisions, but it doesn’t work this way,” Perreault said. “The customers have to give their informal approval prior to the deal being done. They need to feel comfortable with the new owners: us.

“We were very close to the main customers and we visited them either here in the States or in Japan or Germany to make sure that they felt comfortable with what we were trying to do.”

The acquisition of GRS&S marked the fourth transaction Gill has made since 2006 and was by far the company’s largest, Perreault said.

Perreault declined to discuss the terms of the deal, but noted that its size in the $50 million to $100 million range caused Gill Industries to seek outside help for the first time in the company’s history of dealmaking.

Advisers on the deal included accounting firms BDO USA LLP and Plante & Moran PLLC and the law firm of Miller, Johnson, Snell & Cummiskey PLC.

The availability of credit and historically low interest rates also made the timing of the deal work, Perreault said, noting the environment allowed for needed growth with very cheap debt financing. Chase Bank was the lead lender in the transaction, he said.

After the close of the deal in March, the executive team has remained focused on completing the integration of the two companies, Perreault said. He did not rule out further M&A activity down the road, but added that the company will be focused on integration for the next 12 months to 18 months “and making sure the customers are served well.”

“There are no current targets or discussions,” Perreault said. “It’s certainly something we’ll keep our eyes open for.”

Sidebar: Finalist - $100 Million to $100 Million

  • Company: Gill Industries Inc.
  • Top executives: Richard Perreault, Mary Gill-Thornton and Rita Woodruff
  • Annual sales: Not disclosed; Company’s goal is to generate $1 billion in sales in five years
  • Full-time West Michigan employees: Approximately 750 people
  • Business description: A supplier of engineered assemblies for automotive, furniture and multi-use vehicles
  • Best practices for effective deal-making: Focus on adding value to the company being acquired as well as its existing book of business. Utilizing the best practices of the company being acquired added to Gill’s set of best practices. (The tooling teams from both companies shared best practices.)

 

Read 3462 times Last modified on Monday, 08 June 2015 11:58

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