Onex and CPPIB selling Gates Corp. for $5.4 billion to Blackstone

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TORONTO – Onex Corp. (TSX:OCX) and Canada Pension Plan Investment Board has signed a deal to sell Gates Corp. for US$5.4 billion to private equity firm Blackstone.

Gates is a manufacturer of power transmission belts as well as hydraulic and industrial hoses and couplings.

Onex said Friday proceeds from the sale to the Onex Group, which includes its co-investors, will be roughly $2 billion, of which Onex Corp.’s share will be approximately $550 million.

CPPIB’s proceeds from the sale of Gates will be approximately $1.5 billion.

Onex senior managing director Seth Mersky said it was tough decision to sell Gates.

“We don’t see many industrial businesses with its global brand recognition,” he said in a statement.

“Nonetheless, Onex shareholders and our limited partners have done very well. We have thoroughly enjoyed partnering with the Tomkins management team and wish them continued success.”

The deal is expected to close later this year, subject to regulatory approvals and other customary conditions.

Gates is a division of Tomkins, a maker of belts and hoses for the industrial and automotive markets, that Onex and CPPIB jointly acquired in 2010 for roughly $5 billion.

Onex says including the sale of Gates they will have successfully sold eight divisions of Tomkins for $7.9 billion in aggregate proceeds.

In addition to Gates, Tomkins still owns Aquatic, a maker of acrylic bathtubs and shower enclosures.

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