MUSKEGON — Shifting dynamics in the automotive industry convinced family-owned Hines Corp., an industrial holding company, to seek a buyer for its Michigan Spring & Stamping LLC operations.
The decision came after Michigan Spring successfully launched a new production facility in China in September 2018 in response to demands from a key customer, said George “Bud” Hendrick III, executive vice president of corporate development at Hines Corp.
The existing U.S. customer asked Michigan Spring, a maker of springs, assemblies, precision stampings and wire forms, to supply it with springs made in China to serve that end market, he said.
“We did that and had a successful, happy customer, and that’s making Michigan Spring a bigger, more global business,” Hendrick told MiBiz. “It also caused us to think, ‘Wow, if we have to do more of that, we’re going to outstrip our capabilities to really do that effectively. This business needs to be in the hands of a global player in the industry.’”
That realization pushed the company to engage with investment banking firm Quarton International North America, which went on to merge with Cowen Inc., to find a buyer for Michigan Spring, which Hines Corp. acquired in 2008 and paired with its American Coil Spring operations.
The bid process identified Hugo Kern und Liebers GmbH & Co. KG (Kern-Liebers), a family-owned precision manufacturer based in Schramberg, Germany, which Hendrick described as “a great, great fit” for Michigan Spring. Hines Corp. closed on the sale on Feb. 28.
Dustin Daniels, attorney at Miller, Johnson, Snell & Cummisky PLC, represented Hines Corp. in the deal.
“We’re very pleased with that because it was about putting the business in the right hands for future opportunities,” Hendrick said.
Michigan Spring primarily serves the automotive market, but it also supplies customers in the medical, recreation and industrial sectors. The company employs 170 people across operations in Muskegon, El Paso, Texas, and in China. It generated total annual revenue of nearly $31.5 million, according to Kern-Liebers.
Terms of the deal were not disclosed. Michigan Spring President Tim Zwit will stay on and lead the company under Kern-Liebers’ ownership.
The Kern-Liebers family of companies includes 51 businesses globally and more than 8,000 employees, and focuses mostly on the automotive, textile and precision engineering industries. The company generated revenues of 745 million euros, or about $838 million, in its 2017-18 fiscal year, according to its website.
Peter Mendel, president and CEO of Kern-Liebers North America, said the company aims “to leverage our synergies, and further expand the product portfolio on both sides” with the deal for Michigan Spring.
Daniels, a corporate M&A attorney, noted strategic buyers like Kern-Liebers are getting more active in acquisitions, which have been dominated recently by private equity firms.
“The last few years, private equity has been so strong that usually the strategic buyers are not competitive or the best fit for the business,” Daniels said.
He expects the M&A market in West Michigan to remain strong and stable in the year ahead despite “a lot of noise” around tariffs and trade agreements.
“But none of that has resulted in a meaningful reduction in volume or a change from a seller’s market,” Daniels said. “The number of private equity firms with dry powder to put to work is strong, as is cash on strategic buyers’ balance sheets and the strategic (buyers’) pent-up desire to grow and to do things with their cash.”
Positioned for growth
For Hines Corp., the sale of Michigan Spring marked its second deal in the span of about two months. On Dec. 21, Hines Corp. sold its New Philadelphia, Ohio-based Hines Specialty Vehicle Group (HSVG), which included portfolio companies Crane Carrier Co. and Kimble Mixer Co., to New York City-based private equity firm Turnspire Capital Partners LLC.
The companies now operate as Crane Carrier Co., a designer and manufacturer of heavy-duty truck chassis, complete vehicles and aftermarket parts for specialty markets.
Hines Corp. was advised on the HSVG deal by investment banking firm Plaisance Advisors of Chicago. The company was represented in the deal by Tracy Larsen, managing partner at the Grand Rapids office of Honigman LLP.
Despite the two recent sales, Hines Corp.’s buy-and-hold strategy remains intact, Hendrick said, noting the timing of the two unrelated divestitures was “sheer coincidence.” Both deals focused on “putting the business in the right hands for future opportunities.”
“We had just won some big, promising, very attractive business for HSVG, which would require a major ramp up in the business to accommodate,” he said. “We had spent a lot of time and energy on getting HSVG to that point. While you say, ‘Great, we won some business, we want to benefit from that,’ we realize there was also a challenge there. We felt that … we needed to put it in the hands of a partner … that had experience in this industry with these kinds of customers.
“We’re buyers of businesses. We like to think we’re builders and fixers of businesses, and we certainly want to enjoy the rewards of all that effort. But we do ask ourselves on occasion, with the future challenges and opportunities, should it be in someone else’s hands?”
Looking to buy?
Hendrick said Hines Corp. will continue to operate its existing holdings, which locally include Ferrysburg-based Johnston Boiler Co., Muskegon-based Pacific Floorcare, and Spring Lake-based Bennett Pump Co.
He expects Hines Corp. also will start to look for additional acquisition opportunities in the coming months.
“Certainly, some of our plate’s gotten cleared now that we’ve completed some transactions. My guess is later this year, we’ll decide to be more proactive looking for opportunities and then just see where the path takes us,” Hendrick said. “That’s in our DNA.”