CHARLOTTE, N.C.—Carlisle Companies Inc. will sell its Carlisle Tire & Wheel: American Industrial Partners to a New-York based equity firm.
American Industrial Partners, a middle-market private-equity firm that invests in North American-based industrial businesses serving domestic and global markets, will pay $375 million for the Carlisle Transportation Products business, which includes the tire unit.
In business since 1989, American Industrial Partners, manages a portfolio of more than $1 billion in committed capital, including Allied Specialty Vehicles and Heil Traler International Co.
The transaction is subject to customary closing conditions, including regulatory clearances in the countries where Carlisle Transportation Products has operations.
The deal is expected to close in the first quarter of 2014, Carlisle said.
Charlotte-based Carlisle disclosed July 23 it intended to sell the transportation products business, which also includes power transmission products, saying it was "not core to Carlisle's growth strategy."
With 2012 sales of $778 million, Carlisle Transportation Products manufactures and distributes bias-ply and radial tires, stamped and roll-formed steel wheels and tire and wheel assemblies to non-automotive customers, and power transmission belts and related components.
"The sale of CTP is a major step in furtherance of Carlisle's initiatives to focus on and invest in higher-margin, faster-growing businesses," said David Roberts, Carlisle Chairman, President and CEO.
Carlisle announced earlier it recorded a non-cash pre-tax loss of $100 million at CTP for goodwill impairment during the second quarter.
AIP has obtained equity and debt financing commitments of $130 million, Carlisle said in an 8K filing with the Securities and Exchange Commission, while SunTrust Bank and SunTrust Robinson Humphrey Inc. have committed to provide debt financing of up to $375 toward the transaction.
For the quarter ended Sept. 30, CTP reported an 88 percent improvement in pre-tax operating income to $13.9 million on 4.1 percent higher sales of $172 million. Carlisle attributed the unit's earnings improvement to higher sales volume, lower raw materials costs and other cost reductions.
Sales in the outdoor power equipment, power transmission and high-speed trailer segments were up 18, 12 and 5 percent, respectively. Offsetting these gains partially was a drop in sales in the power sports market.
The earnings improvement did not, however, overcome losses in the first six months. CTP's operating loss for the nine months ended Sept. 30 was $58.4 million, which contrasts with earnings of $47.7 million in 2012. Sales of $602.9 million were 13.4 percent below those in 2012.