Racine, Wisconsin-based Modine Manufacturing Company (NYSE: MOD), a diversified global leader in thermal management technology, agreed to acquire the Luvata Heat Transfer Solutions division (HTS) from Luvata Oy, owned by private equity firm Nordic Capital, for $422 million. Luvata HTS is the world’s largest coils-coolers-and-coatings group supplying precise temperature control for virtually any situation in which temperature matters.
The deal will be financed through a combination of cash, debt, and $25 million of Modine common stock.
Luvata HTS is a leading manufacturer of commercial and industrial coils, coolers and related products, primarily for the HVAC&R markets. The HTS division has 18 plants across the globe, excellent operations, extensive customer and supplier relationships, and has a leading presence in many international heat-transfer markets with manufacturing capabilities in North America, Europe, and Asia. In addition, Luvata HTS is a significant player in the power generation and transformer cooler markets. In 2015, Luvata HTS had net sales of roughly $530 million and EBITDA of $59 million.
Nordic Capital acquired Luvata from Outokumpu Oyj in 2005, through its Nordic Capital Funds V and VI.
Luvata is a world leader in metal solutions manufacturing and related engineering services. Luvata’s solutions are used in industries such as renewable energy, power generation, automotive, medicine, air-conditioning, industrial refrigeration, and consumer products. Employing over 6,400 staff in 18 countries, Luvata works in partnership with customers such as SolarWorld, Siemens, Toyota, CERN and Carrier.
Modine, with fiscal 2016 revenues of $1.4 billion, specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, heating, ventilation and air conditioning equipment, off-highway and industrial equipment and refrigeration systems. Modine is a global company with operations in North America, South America, Europe, Asia and Africa.
“Luvata HTS is the largest independent producer of HVAC&R coils and coatings globally. They bring an innovative culture and broad product offering that are highly complementary to Modine. Further, they bring a global footprint with manufacturing facilities spread over three continents, all of which are supported by best in class sales, engineering and support teams,” said Modine president and chief executive Thomas A. Burke.
Dennis Appel, Luvata HTS president added, “Luvata and its owners are proud to have taken this important step toward combining the HTS Division with Modine, another proven industry leader and a true innovator in our industry. With Modine we are well positioned to continue our growth and be a part of a company that shares our passion for innovation and commitment to integrity.
“In eleven years under its current owners, Luvata Group has grown in profitability by 250% despite enduring the global recession and huge shifts in commodity prices,” said Jyrki Vesaluoma, MD and CFO of Luvata Group.
The deal is expected to close in the next 3 to 4 months, subject to customary closing conditions, including regulatory review.
J.P. Morgan Securities LLC serves as Modine’s exclusive financial advisor and Kirkland & Ellis serves as Modine’s primary legal advisor. Citigroup Global Markets Ltd is acting as Luvata Oy’s financial advisor.
Nordic Capital has assets under management of EUR 11 billion. The most recent fund is Nordic Capital Fund VIII with EUR 3.5 billion in committed capital. Nordic Capital Funds are based in Jersey, Channel Islands, and are advised by the NC Advisory companies in Sweden, Denmark, Finland, Norway, Germany and the UK.
The origins of the firm date back to 1989 when Skandia Life Insurance, the largest insurance company in the Nordic Region and Svenska Handelsbanken, a major Nordic commercial bank established a joint venture to pursue buyouts. Robert Andreen and Morgan Olsson, then senior executives at Handelsbanken, co-founded Nordic Capital and, with SEK 500 million committed by Skandia, created Nordic Capital I with focus on Swedish investments. Since that time, Nordic Capital has become some of the most prominent and respected private equity firms in Europe.