Vigor Industrial has acquired by private equity

The combined company will create a bicoastal leader in critical ship repair services and commercial and defense-related fabrication services. Key customers include the U.S. Navy, U.S. Coast Guard, Military Sealift Command, Boeing, cruise lines, fishing fleets, barges and ferry services for local and state governments, and other key commercial and defense customers. 

The transaction is subject to customary closing conditions and is expected to close by the end of the third quarter 2019. Financial terms were not disclosed. 

Derek Whang, Principal at The Carlyle Group, said,

“We look forward to working with our partners at Stellex, Vigor and MHI to create a stronger combined company of scale, capable of providing differentiated, coast-to-coast services to the U.S. Navy, U.S. Army and other defense, infrastructure, and maritime customers. Together, Vigor and MHI are well positioned with their unique, national assets to grow in the highly attractive ship repair and fabrication markets, supported by compelling sector dynamics.” 

David Waxman, Managing Director at Stellex Capital, said,

“We are thrilled to have partnered with the MHI management team to grow the business over the last four years, including through the acquisitions of Accurate Marine and Seaward Marine, and look forward to working with the combined management teams as we expand our geographical and customer mix. MHI’s commitment to its customers and its employees has been the foundation of its growth, and we welcome the partnership with Carlyle and Frank Foti in this next stage.” 

The Carlyle Group will become majority owner of the combined company. Equity for the investment will come from the Carlyle U.S. Equity Opportunity Fund II, a $2.4 billion fund that focuses on middle-market and growth companies in the United States and Canada. As part of the transaction, Stellex Capital, MHI’s existing owner, will contribute new equity to the platform, while Vigor’s CEO Frank Foti will roll a portion of his existing Vigor ownership stake into the combined company.

A CEO search is underway for the new company. Tom Rabaut, former President and CEO of United Defense and a current Operating Executive at The Carlyle Group, and Admiral James Stavridis, a retired 4-star U.S. Navy officer, former NATO Alliance Supreme Allied Commander, and a current Operating Executive at The Carlyle Group, will both join the Board of Directors. Mr. Foti will also join the Board of Directors as Vice Chairman and will continue as Vigor’s CEO until a new CEO is retained. Tom Epley will continue to lead the MHI business. 

Vigor Industrial LLC, majority-owned by CEO Frank Foti, is a provider of complex fabrication and ship repair services. It employs 2,300 people and operates eight drydocks across the Pacific Northwest and Alaska, including the largest floating drydock in North America. Vigor excels at ship repair, specialized shipbuilding, and other complex fabrication projects in support of aerospace, defense, and infrastructure end markets. While the company is widely known for building ferries, it also builds high-performance military craft for the United States and other allied foreign governments. 

MHI Holdings LLC, owned by Stellex Capital, is a leading provider of full-range ship maintenance, repair, and modernization services to the U.S. Navy and Military Sealift Command in Norfolk, Virginia. MHI also provides hull cleaning, ship husbandry services, underwater painting and inspections, wastewater treatment, and chemical cleaning services globally. MHI is one of the only private shipyards in Norfolk that can service large surface combatants and amphibious ships.

The Carlyle Group is a global investment firm with deep industry expertise that deploys private capital across four business segments: Corporate Private Equity, Real Assets, Global Credit and Investment Solutions. With $222 billion of assets under management as of March 31, 2019, Carlyle’s purpose is to invest wisely and create value on behalf of our investors, portfolio companies and the communities in which we live and invest. The Carlyle Group employs more than 1,725 people in 33 offices across six continents.

Stellex Capital is a private equity manager that invests in and oversees U.S. and European corporate assets. With $870 million of committed capital, Stellex’s focus is on companies going through business or industry transitions, as well as special situation opportunities. Stellex seeks to identify and deploy capital in opportunities that have the potential to provide stability, improvement, and growth. Portfolio companies benefit from Stellex’s industry knowledge, operating capabilities, network of senior executives, strategic insight and access to capital. Sectors of particular focus include specialty manufacturing, industrial and business services, aerospace & defense, and government services.