Sale of captive foundry

Corporate Divestiture of Captive Operation


Transaction Background: A multi-billion dollar conglomerate sought to divest its captive supplier of a key component to allow the parent company more flexibility in sourcing the parts.  Initial internal efforts to consummate a transaction without an advisor were unsuccessful.  The parent company retained a managing director of Plaisance Advisors to assist in completing a transaction.  The eventual acquirer of the business would have to agree to multi-year, double digit cost reductions when selling components to the parent company.  During the transaction due diligence the Company's contract with the United Steel Workers would expire.

Action Steps: Plaisance Advisors recommended and implemented a marketing of the Company that focused on strategic acquirers.  Plaisance solicited and received multiple offers for the business from strategic acquirers and invited a sub-set of the companies that made offers to visit the Company for a management presentation hosted by Plaisance.  Subsequent to the presentations, one of Plaisance Advisors' managing directors met with each interested company to refine their offer and discuss transaction structure.  

Result: One of the bidders was selected to conduct due diligence on the Company and begin discussions with the Union on a new contract.  When it became clear the bidder and the Union would be unable to reach an agreement on a new contract, Plaisance contacted one of the previous bidders and re-engaged them in the sale process.

The transaction was completed with this backup bidder on terms as favorable as the initial bidder.