MANISTEE — A Northern Michigan-based manufacturer of electronics and electrical assemblies has been acquired by a portfolio company of New Water Capital Partners LP of Boca Raton, Fla.
In the deal for Manistee-based Amptech Inc., New Water Capital-backed Myotek Industries Inc. of Irvine, Calif. said it plans to expand the company’s manufacturing operations in Michigan, as well as at a satellite location in Wampum, Pa.
For Myotek, a designer, manufacturer and Tier 1 supplier of LED forward lighting systems for automotive and transportation applications with a sales office in Detroit, the “highly strategic acquisition” provides the company with domestic production capabilities to better serve North American automotive lighting customers, according to Brian McGee, a partner at New Water Capital.
The company aims to use those domestic production capabilities as a competitive advantage, given its shorter supply chain compared to other competitors, which typically source LEDs internationally.
“Building out U.S. manufacturing will allow us to more efficiently support Myotek’s growth and our customers over the coming years,” Myotek CEO Eric Showalter stated.
Terms of the deal were not disclosed. Current Amptech President Lee Wyatt will remain in his role after the transaction.
“We are excited that our partnership with New Water and Myotek will enable Amptech to grow, both in its historic core business segments as well as more deeply penetrate the automotive lighting end market,” Wyatt stated.
Amptech was founded in 1980 and serves customers in the automotive, utility and other industrial segments.
Representatives from Amptech and Myotek did not respond to repeated requests for comment.
Myotek’s investment in Amptech comes amid a period of growth in LED technology and adoption rates among automotive OEMs, according to a report from research firm Global Market Insights Inc. of Selbyville, Del.
The firm expects the global automotive lighting market to exceed $40 billion by 2024, expanding at a 6 percent compound annual growth rate starting this year. The report projects considerable opportunities for LED technologies, which “are witnessing a high popularity in the automotive industry.”
“LEDs offer several benefits such as performance and energy efficiency, bright lights, and low power consumption,” according to the report, which also noted that high tariff and trade restrictions could act to tamp down growth for the market.
Mike Wall, director of automotive analysis for IHS Markit in Grand Rapids, said the Myotek deal for Amptech seems “counterintuitive” at first because of all the LED technology investments that companies have poured into Asia over the last decade.
However, the higher local sourcing requirements in the proposed United States-Mexico-Canada Agreement and the escalating costs associated with doing business in Asia, whether for labor, logistics or tooling, have led many companies to recalibrate their business model, Wall said.
“I suspect it’s probably more along the lines of building up that local content and securing sources for some of those downstream components here locally,” he said of the likely drivers for the Amptech deal, noting more suppliers are trying to serve customers locally in each market.
Wall expects automakers to continue turning to LED technology in all areas of the vehicle, whether for forward lighting and brake lights or in the interior.
“You get the benefit of very clear, crisp, bright light, and also relatively low energy usage,” he said. “No doubt, we can see some very, very sizeable growth in LED applications.”
New Water Capital focuses on investing in North American industrial manufacturing, retail and consumer products companies in the lower middle market, with $30 million to $300 million in revenue. The deals can involve entrepreneurs looking for an exit, corporate carve-outs, underperforming businesses or turnarounds.
The private equity firm is deploying funds from a $406 million capital raise that it completed in 2015.
The Amptech deal marks the second investment in a Michigan company in as many years for New Water Capital. In January 2017, the private equity firm acquired Muskegon-based KL Outdoor LLC, a maker of kayaks, paddle boats, portable sanitation units and other consumer products.
Under New Water Capital, KL Outdoor went on to acquire Quebec-based kayak maker GSC Technologies, and moved its headquarters to the former SPX Corp. building at 700 Terrace Point Drive in downtown Muskegon.
The company, which was later rebranded as Hemisphere Design Works, was a winner in the 2017 MiBiz M&A Deals of the Year Awards in the category for transactions between $25 million and $150 million.