New Berlin-based Velvac Holdings Inc.
has been acquired by Naugatuck, Connecticut-based The Eastern Co.
for $39.5 million, plus an earnout based on the growth of Velvac’s Road-iQ business.
Velvac was sold by Chicago private equity firm Prospect Partners
, which had acquired it with Jeff Porter and management in August 2005. Milwaukee investment bank Cleary Gull
advised Velvac in the sale to The Eastern Co.
Founded in 1934, Velvac designs and manufactures proprietary vision technology for commercial vehicles. Its 2016 revenue totaled $60.3 million. Velvac products are used in heavy and medium duty trucks, motorhomes and buses. It is a Tier 1 supplier of mirrors and camera-enabled vision systems, which make up about two-thirds of its revenue. It also sells aftermarket components and vision systems to OEM dealers, OEM parts distribution centers and other aftermarket channels. Velvac sells about 45,000 camera-enabled units each year. Road-iQ is its new 360-degree view camera, recording and communication system.
Velvac has 275 employees, about 90 of whom are based at the headquarters and distribution facility in New Berlin. Another 174 employees are based in Reynosa, Mexico, where the products are manufactured, said John Sullivan, chief financial officer of The Eastern Co. The New Berlin operation will stay intact and operate as usual in the integration, Sullivan said.
The Eastern Co. manufactures custom-engineered components and products, such as industrial hardware, security products and metal castings. It has 995 employees at 13 facilities spread among the U.S., Canada, Mexico, Taiwan and China. Because it makes such a wide array of parts, Eastern is able to quickly adapt to changes in several markets, including heavy and medium trucks, mining, commercial laundry, electronics, military and industrials.
The acquisition of Velvac will expand Eastern’s market reach. It is expected to be accretive to Eastern’s earnings in 2018. Velvac will operate as an independent subsidiary of Eastern. Its management and employees are expected to remain in place.
“Velvac represents an excellent fit for Eastern and helps us expand our presence in the truck and motorhome markets. This transaction also adds a new growth platform, with significant potential to expand margins in the future,” said August Vlak, president and chief executive officer of Eastern. “We believe Velvac will become a strong contributor to our top line and earnings growth. We look forward to working with Jeff Porter, Velvac’s president and CEO, and his talented team for many years to come.”
“We are proud of the team and the business we have built over the past 11 years with the support of Prospect Partners,” Porter said. “Eastern now gives us the stable, knowledgeable platform we need to grow, and we are excited to partner with Eastern to help take Velvac to the next level.”