Buyout firm GTCR has scored a successful exit by flipping aviation software maker Camp Systems International to Hearst Communications for nearly $2 billion following a quick, active auction.
Hearst announced Wednesday that it has agreed to acquire the Merrimack, N.H., company for an undisclosed sum. The New York media company anticipated the transaction would close by year's end.
Camp Systems generates about $100 million in earnings before interest, taxes, depreciation and amortization and was shopping itself with a valuation target of approximately $2 billion, said four sources familiar with the situation, with one adding that the ultimate price came close to the valuation target.
The maker of software that focuses on manages and tracks maintenance of jets, helicopters and turboprop aircraft is an extremely attractive business that had been expected to garner top-tier multiples, three of these people said, adding that Camp Systems has long been viewed as an appealing target for financial sponsors and strategics.
Camp has steadily received expressions of inbound interest over the years, one source said, adding that the interest continued after the company sealed a partnership with Gulfstream Aerospace in June.
After it was approached by a number of different parties earlier this summer, Camp and its backer pursued a so-called precapitalization by adding a portability feature to the company's capital structure to minimize risk involving a potential sale, given the backdrop of uncertainty in the financing market and the November election, this person said.
The source noted a fairly traditional auction subsequently followed, kicking off after Labor Day. The process attracted a broad level of interest from prospective buyers.
The auction moved quickly because the financing already was in place and interested parties already had been watching the asset for quite some time, the source said.
Camp Systems could have been an interesting asset for Honeywell International (HON) - Get Report , Boeing (BA) - Get Report and Rockwell Collins (COL) , a second source said, adding that Rockwell Collins had been far along in the 2012 auction for the target led by Credit Suisse Group that GTCR won.
"It's a terrific transaction for us," GTCR managing director Craig Bondy told The Deal. "We accomplished a lot of transformation and had a terrific partnership with the team. We were able to grow the business beyond our original investment thesis."
When the Chicago PE firm acquired Camp in 2012 for $675 million from Warburg Pincus, the firm had two elements to its investment thesis, Bondy added.
GTCR planned to focus on investing in Camp to help continue its performance as a highly stable, nicely growing business with a strong position in the market while simultaneously expanding its portfolio offerings to address engines, he explained.
Fast forward four years, and GTCR achieved even more than what it had anticipated and transformed the business, Bondy said, adding that Camp also entered a new market by investing in a product for the helicopter sector. It also pursued vertical integration through investing in software products for service centers.
"We found a buyer that will provide a great continuing home for Camp customers and the Camp management team," Bondy said. "We're really excited to see all that come together for this investment."
GTCR, which is known for its Leaders Strategy that discovers executives and partners with them to find investments, has had an active year.
It purchased fintech company Optimal Blue for $350 million in July after investing in life science tools maker Vector Laboratories in April. The firm completed its $550 million purchase of telematics provider Lytx in March.
Hearst, meanwhile, has turned to M&A in an effort to diversify outside its legacy media business, as exemplified by its acquisitions of healthcare software provider MedHOK in August and credit rating agency Fitch Ratings, among others. The company also is a joint venture partner in A&E Networks; owns 30 television stations; publishes the Houston Chronicle and San Francisco Chronicle; owns Cosmopolitan, Elle and Car and Driver; and has stakes in BuzzFeed and Vice Media.
"We look forward to partnering with the Camp team to capitalize on new opportunities to create more growth, expand its global reach and develop new offerings," Hearst Business Media president Richard Malloch said in the statement.
Bloomberg reported the news of Camp Systems hiring UBS to lead its sale in September.
Officials with Camp and Hearst weren't available for comment Wednesday.
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