Kester, a division of Northrop Grumman Corporation, Acquired by Amercian Capital

Kester, a division of Northrop Grumman Corporation, Acquired by Amercian Capital

American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $70.5 million in the buyout of Kester, a division of Northrop Grumman Corporation’s (NYSE: NOC) Component Technologies sector and a leading global supplier of assembly materials to the electronic assembly, component, electrical and industrial marketplace. American Capital’s investment takes the form of a revolving credit facility, senior term loans, senior and junior subordinated debt and preferred and common equity issued by the acquiring company, of which American Capital is an 84% shareholder. The acquiring company paid $60.0 million for the purchase of Kester. The remaining ownership in the acquiring company represents amounts under the employee options program as well as equity co-investors.

“American Capital’s investment in Kester demonstrates several of our strengths: our buyout expertise, one-stop buyout capability, and ability to execute a corporate spin-off,” said American Capital COO Ira Wagner. “We are excited about working with Kester’s management in pursuing their strategic initiatives which we believe will create value in the years ahead.”

American Capital has invested more than $1.1 billion in the past twelve months.

“Kester is known as a high-quality supplier with leading-edge technology focused on developing advanced products to meet its customers’ long-term strategic initiatives.
This reputation has positioned the company well in the marketplace, with significant presence worldwide,” said American Capital Principal Ian Larkin. “With a strong brand name, leading world-wide market position, the competitive advantage of an extensive global footprint, a diverse, blue chip customer base and substantial investment in new product development, Kester is in a strong position to capitalize on improving industry conditions.”

Founded in 1899 with world headquarters in Des Plaines, IL, Kester is a leading global supplier of high quality solder and solder derivative products for electronic assembly. Kester’s wide range of products include an array of basic and high-tech attachment materials, including traditional soldering chemicals, bar and wire solder and paste products and advanced products such as epoxies, polymers, encapsulants, preforms, thermal management materials, precision solder columns and micro-spheres. The company’s products serve over 1,200 customers in the automotive, computer, communication, consumer, medical, industrial, electronic, semiconductor packaging, outsourced packaging and components industries. Customers include some of the world’s best known blue chip companies. Through its rigorous and well-designed research and development efforts, Kester has been awarded Intel’s prestigious Supplier Continuous Quality Improvement Award for four consecutive years. Kester’s global footprint encompasses nine facilities located in Illinois, Canada, Brazil, Germany, Singapore, Malaysia, Japan and Taiwan. Pictured at left are Kester’s solder pastes, carefully manufactured, temperature controlled and tested to ensure a strong, high quality, electrically conductive metal bond.

“American Capital’s in-depth understanding of our business, flexible capital and ability to make a long-term commitment made it the ideal investment partner,” said Kester President and CEO Roger Savage. “American Capital’s backing will benefit our company and our customers as we strive to continue to bring them the highest quality attachment materials they have known and trusted for over a century.”
Click here for more information about Kester’s history of high quality products and new product innovation.

As of January 31, 2004, American Capital shareholders have enjoyed a total return of 273% since the Company’s IPO — an annualized return of 23%, assuming reinvestment of dividends. American Capital has declared a total of $13.82 per share in dividends since its August 1997 IPO.

American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2.5 billion. American Capital is an investor in and sponsor of management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

Company Type: Private Companies, Public Corporations

Transasction Type: Sellside M&A

Industry: Industrial Manufacturing