{"id":3323,"date":"2023-06-20T10:11:21","date_gmt":"2023-06-20T15:11:21","guid":{"rendered":"https:\/\/www.mecinc.com\/?p=3323"},"modified":"2023-06-20T10:11:23","modified_gmt":"2023-06-20T15:11:23","slug":"mayville-engineering-company-announces-definitive-agreement-to-acquire-mid-states-aluminum-corp","status":"publish","type":"post","link":"https:\/\/www.mecinc.com\/news\/mayville-engineering-company-announces-definitive-agreement-to-acquire-mid-states-aluminum-corp\/","title":{"rendered":"Mayville Engineering Company Announces Definitive Agreement to Acquire Mid-States Aluminum Corp."},"content":{"rendered":"\n

Acquisition to provide MEC strategic capabilities expansion within lightweight materials<\/em><\/p>\n\n\n\n

Acquisition expected to be immediately accretive, excluding transaction costs, to MEC\u2019s EPS, Adjusted EBITDA and Free Cash Flow at closing<\/em><\/p>\n\n\n\n

MEC to host MSA acquisition conference call and webcast at 8:00 a.m. Eastern Time on Tuesday, June 20, 2023<\/em><\/p>\n\n\n\n

MAYVILLE, Wis.–(BUSINESS WIRE)– Mayville Engineering Company, Inc. (NYSE: MEC) (the \u201cCompany\u201d or \u201cMEC\u201d), a leading value-added provider of design, prototyping and manufacturing solutions serving diverse end-markets, today announced a definitive agreement to acquire privately held Mid-States Aluminum Corp. (\u201cMSA\u201d) for a total consideration of approximately $96 million, subject to customary adjustments. The proposed acquisition is expected to close during the third quarter 2023, subject to the satisfaction of customary closing conditions.<\/p>\n\n\n\n

Wisconsin-based MSA is an industry-leading, vertically integrated manufacturer of custom aluminum extrusions and fabrications. MSA offers value-added services that include design, engineering, extrusions, fabrication, anodizing and finishing, assembly, and packaging. For nearly 60 years, MSA has served major OEMs in the Building and Construction, Recreational, Medical, Agriculture, Transportation and other diverse end-markets. MSA operates two state-of-the-art facilities, both in Fond du Lac, Wisconsin, that include approximately 325,000 square-feet of manufacturing space.<\/p>\n\n\n\n

\u201cMSA 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,\u201d said Jag Reddy, President and Chief Executive Officer. \u201cUpon closing of the acquisition, MSA will be immediately accretive, excluding transaction costs, to MEC\u2019s earnings per share, Adjusted EBITDA margin and free cash flow.\u201d<\/p>\n\n\n\n

\u201cOur acquisition of MSA will accelerate the expansion of MEC\u2019s capabilities into lightweight materials fabrication, a designated strategic priority highlighted within our MBX value creation framework,\u201d continued Reddy. \u201cMSA\u2019s 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.\u201d<\/p>\n\n\n\n

\u201cCustomer demand for fabrications expertise within aluminum and other lightweight materials continues to increase,\u201d stated Reddy. \u201cThe addition of MSA will position us to grow our share-of-wallet with existing accounts, while building leading market positions within nascent, high-potential industries that require the full lifecycle of solutions that we offer. 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,\u201d concluded Reddy.<\/p>\n\n\n\n

\u201cWe are excited to welcome MSA\u2019s 250 employees to the MEC family,\u201d concluded Reddy. \u201cOur shared commitment to product innovation, performance excellence, customer-centric relationships and long-term value creation will help us further deliver on our MBX initiatives, while continuing to build a market-leading brand of scale.\u201d<\/p>\n\n\n\n

Transaction Overview<\/strong><\/p>\n\n\n\n

MSA brings to MEC an established track record of financial and operational execution. 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\u2019s earnings per share, Adjusted EBITDA and free cash flow.<\/p>\n\n\n\n

MEC intends to fund the transaction with an amendment to its existing credit agreement that increases the revolving credit facility size to $250 million. At closing, MEC anticipates its pro-forma ratio of net debt to Adjusted EBITDA will be approximately 2.5x – 2.8x. 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 to 1.5x – 2.0x.<\/p>\n\n\n\n

Based on current expectations and market conditions, the Company expects that the MSA acquisition will contribute between $30 – $35 million of net sales and between $4 – $6 million in Adjusted EBITDA for the fiscal year 2023.<\/p>\n\n\n\n

Strategic Rationale<\/strong><\/p>\n\n\n\n