Twin Cities manufacturer Remmele Engineering is being sold by private equity firm Goldner Hawn for $182.5 million.
Remmele Engineering Inc., a contract manufacturer that has operated in the Twin Cities for more than six decades, is changing hands for the second time in five years.
RTI International Metals Inc., a Pittsburgh-based supplier of titanium components for the aerospace and defense industry, said Tuesday that it is paying $182.5 million to acquire the business from Minneapolis private equity firm Goldner Hawn Johnson & Morrison Inc., which bought Remmele in 2007. The price includes $164.5 million in cash and the assumption of about $18 million in debt.
Goldner Hawn Managing Director Jack Morrison said the deal enables Remmele to expand into a variety of new markets and to keep growing. The company does contract manufacturing for the aerospace, defense and medical device industries.
Morrison said that when his partnership bought Remmele, operating profits were less than $8 million a year. After adding the current management team and providing it with capital to expand the business, Remmele's operating profit grew to about $22 million a year.
"From our perspective, it was kind of a win-win for everybody," Morrison said of the deal.
RTI said in a news release that Remmele's senior leadership will remain with the company, which began in St. Paul in 1949 and was family-owned until 2007. Remmele employs about 500 people at operations in New Brighton, Big Lake and Coon Rapids.
RTI Chief Executive Dawne Hickton said adding Remmele will enable the company to give customers a broader offering of products. "Remmele has a strong reputation among many of our shared aerospace and defense customers and holds the same standing in the medical device market," Hickton said in a news release.
RTI is financing the acquisition with cash. The purchase is expected to close before the end of the first quarter.
The company did not return calls seeking more information on its plans for Remmele and its employees.
Stephen Levenson, an analyst who follows RTI for Stifel, Nicolaus & Co., said the deal makes strategic sense and follows a "pattern of moving downstream to provide a greater range of products and services."
The acquisition will add medical devices to RTI's portfolio of products and, Levenson said, could help it weather likely reductions in defense spending by allowing the company to "better utilize its available titanium melting capabilities to supply Remmele with materials."
RTI shares jumped $2.50 on Tuesday, or 11 percent, to $25.91.
A long, local history
Remmele Engineering was founded in 1949 by Fred L. Remmele, who immigrated to the United States in 1926 from Germany. He worked through the years for various tool and die shops in the Twin Cities and Chicago before starting his own company.
In the spring of 2007, after 58 years of ownership, the Remmele family sold the company to Goldner Hawn.
James Walsh 612-673-7428