Mayville Engineering Company, Inc. announced a definitive agreement to acquire privately held Mid-States Aluminum Corp. for $96 million.
The proposed acquisition is expected to close during the third quarter 2023.
Mid-States Aluminum is a vertically integrated manufacturer of custom aluminum extrusions and fabrications. Its services include design, engineering, extrusions, fabrication, anodizing and finishing, assembly, and packaging.
For nearly 60 years, Mid-States has served major OEMs in the building and construction, recreational, medical, agriculture, transportation and other diverse end-markets. It operates two facilities in Fond du Lac that include approximately 325,000 square feet of manufacturing space.
“MSA is an established provider of aluminum extrusions, whose history of growth and innovation, attractive margin profile, deep customer relationships and diverse end-markets are highly complementary to our existing business,” said Jag Reddy, president and chief executive officer.
Reddy said the acquisition will accelerate MEC’s expansion into lightweight material fabrication.
“MSA’s state-of-the-art design, engineering and manufacturing capabilities are highly complementary to our existing operations, providing a platform for higher-margin profitable growth within growing adjacent markets,” Reddy said.
He said customer-demand for lightweight materials continues to grow.
“During the next three years, we anticipate significant synergies to result from this transaction, consistent with our long-term focus on margin expansion and profitable growth,” Reddy said. “We are excited to welcome MSA’s 250 employees to the MEC family,”
For the full-year 2022, MSA recorded total revenue and adjusted EBITDA of approximately $86 million and $16 million, respectively, resulting in an adjusted EBITDA margin of more than 18%. Upon closing, the transaction will be immediately accretive, excluding transaction costs, to MEC’s earnings per share, Adjusted EBITDA and free cash flow.
MEC intends to fund the transaction with an amendment to its existing credit agreement that increases the revolving credit facility to $250 million. Given the expected cash generation of the combined company, MEC intends to reduce its net leverage within the first 18 months after the closing of the transaction.
Based on current expectations and market conditions, the company expects that the MSA acquisition will contribute between $30 million to $35 million of net sales and between $4 million to $6 million in Adjusted EBITDA for the fiscal year 2023.
MEC remains committed to concentrating its market expansion activities within emerging technologies, such as battery electric vehicles, where demand for light-weight material product design, engineering and fabrication solutions continue to accelerate. The addition of MSA’s aluminum fabrication capabilities will position MEC to become an early mover of scale within these vertical markets.
The company anticipates no material disruption to operations at either MEC or MSA during the integration period, which is expected to conclude by the end of 2023.
