TORONTO - Onex Corp. (TSX:OCX) says it will sell its Husky International industrial machines business to Berkshire Partners and OMERS Private Equity for US$2.1 billion.
Onex acquired Husky, which makes injection molding machines, in 2007 with an equity investment of approximately $622 million.
Husky's equipment is used to make plastic products including bottles and caps for beverages, food containers, medical devices and consumer electronic parts. It has customers in more than 100 countries and plants in Canada, the U.S., Luxembourg and China.
Onex is one of Canada's largest and most diversified companies, with investments in everything from electronics manufacturing services through Celestica Inc. (TSX:CLS), to automotive and aerospace manufacturing, to real-estate, health-care and financial services.
Onex's businesses generate annual revenues of C$36 billion, have assets of C$42 billion and employ more than 238,000 people around the world.
Onex is best known for acquiring and attempting to turn around businesses that have fallen on hard times, often because of industry overexpansion or consolidation.
It often only owns a minority equity interest in its companies but retains voting control that allows it to manage the business on behalf of itself and its partners, which include pensions and other institutional investors.
Upon closing, Onex will have received total net proceeds of $1.8 billion, including a prior $98 million distribution from Husky. The company says that will result in the company earning 2.9 times invested capital and a 36 per cent rate of return.
Onex will make $635 million from the sale, including carried interest.
"This is an excellent outcome for Onex' shareholders and our limited partners," said Anthony Munk, a managing director of Onex.
"Husky's performance is a testament to our approach to identifying attractive businesses and partnering with exceptional management teams to improve operations, enhance profitability and build industry-leading companies."
The deal is targeted to close early in the third quarter and is subject to usual closing conditions.
Husky CEO John Galt said the industrial company's takeover by Onex a few years ago helped it become more efficient and profitable and expand its markets.
"Through our partnership with Onex, Husky has focused its efforts to reduce waste, shed non-core and non-performing assets, and reinvested in better solutions and services to our core market customers," Galt said in a release.
However, he also said he is looking forward to the new partners.
"Husky has a tremendous future and the management team is excited to be working with our new partners in this next chapter," he added.
Galt will continue to stay on as Husky's president and CEO. Its management team is expected to continue on a significant investor in the business through equity ownership.
Michael Ascione, managing director of Berkshire Partners, a Boston-based private equity firm that invests in mid-sized businesses, said Husky is a compelling company.
"We believe Husky's global presence and strong customer value proposition enables many strategic growth initiatives and provides significant long-term potential," he said.
Meanwhile, Lisa Melchior, managing director of OMERS Private Equity Inc. said Husky is an example of a Canadian success story.
"It is a global market leader in an industry that is poised to benefit from the growth in emerging markets. We believe the future opportunities for this company are extremely attractive."
OMERS Private Equity manages about $5.5 billion of investments on behalf of OMERS, one of Canada's pension funds.
