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Platinum Equity Agrees to Buy Logistics Firm for $174 Million

November 27, 2003|Josh Friedman | Times Staff Writer

Platinum Equity, the big Los Angeles investment firm, said Wednesday that it would buy the logistics unit of London-based Hays for $174 million.

The deal would boost Platinum's annual revenue to $5.5 billion from $4 billion and cement its position as Los Angeles County's largest private company, the firm said. It would add 16,000 employees, nearly doubling its global employee base.

Platinum led private L.A. companies in fiscal 2002 revenue, according to the Los Angeles Business Journal. Nationally, Platinum ranks No. 34, up 10 spots on the Forbes magazine list released this month.

The cash deal, which is expected to be completed in early 2004, would expand Platinum's portfolio to 20 companies worldwide. The firm, founded by financier Tom T. Gores in 1995, has completed three acquisitions this year.

"This acquisition underscores a concerted effort by Platinum to expand our global reach, particularly in Europe, as well as our market penetration in another mission-critical business sector," Gores said.

"It will be a cornerstone company as we grow in the supply chain and logistics market space."

Gores called the profitable Hays Logistics an ideal fit for Platinum's technology services niche, citing its "strong customer base and recurring revenue."

Hays Logistics operates in 11 European countries and has a small U.S. presence, providing supply-chain design, information systems and data management, warehousing, trucking and other services. Customers include Nestle, Kimberly Clark Corp., Unilever, Ford Motor Co. and Alcatel.

The deal is subject to approval by the parent company's shareholders and by the European Union.

In addition to the Platinum deal, Hays expects to generate $170 million from the separate sale of real estate connected to the logistics unit.

Platinum plans to rename the logistics business and keep the current management team in place, company officials said.

Analysts said Hays would be getting about what was expected when it announced in March that it planned to carve out its logistics business to pay down corporate debt and focus on its core personnel operations.

Dresdner Kleinwort Wasserstein analyst David Greenall said the price was slightly above of his expectations.

"I think what is more important than the price is the timing," he told Reuters. "I thought this could have taken 12 to 18 months to get rid of."

Platinum, which began negotiations as soon as Hays said it would dispose of the unit, bought the voice and data networking business of France's Alcatel last year and renamed it NextiraOne Europe. In the third quarter, NextiraOne Europe posted its strongest sales in three years, Gores said.

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