The Carlyle Group, a private equity buyout and investment firm based in Washington, has acquired Milwaukee-based Rexnord Corporation from Invensys plc (London).

Invensys, a multinational manufacturing conglomerate, became a victim of a soft economy, lack of focus and mounting debt. In February 2002, it put Rexnord and several other businesses up for sale to pay down debt, saying, "Whilst these are good businesses, they fall outside the scope of the strategy and operate in consolidating markets." Rexnord was the largest of the groups being divested, and until recently, the business press was scolding Invensys for taking so long to find a buyer for Rexnord.

Carlyle was founded in 1987 and is one of the world's largest private equity invest firms. With over 535 investors in 55 countries, the firm has over $13.5 billion in capital committed to 20 private equity funds.

Carlyle reportedly paid $880 million for Rexnord, or 8.5 times last year's $104 million operating profit -- Rexnord's fiscal year sales were $724 million. The transaction is expected to be completed by December 1, 2002.

Rexnord, headquartered in Milwaukee, Wisconsin, is an multi-tier industrial company with over 5,000 employees. Rexnord manufactures power transmission components, motor brakes, chain, and bearings. There are five bearing companies in Rexnord.

Link-Belt Bearing Division, headquartered in Indianapolis, Indiana, manufactures a wide range of automotive and industrial bearings, inserts and mounted units. A second manufacturing location in Clinton, Tennessee produces cylindrical roller bearings.

Link-Belt is best known for its industrial bearing inserts and mounted units, including pillow blocks, flange units, plummer blocks and all-stainless units. Link-Belt offers not only ball bearings and cylindrical roller bearings, but also sleeve bearings in babbitt, bronze and cast iron.

Rex Bearings, in Downers Grove, Illinois, manufactures industrial mounted roller bearings, pillow blocks, flange blocks and take-up units which allow for a wide degree of shaft misalignment within the bearing itself.

Filament Bearing Operation, also in Downers Grove, Illinois, manufactures Duralon plain inserts of Teflon and carbon fiber.

MB Bearings is located in Valparaiso, Indiana. Acquired by Rexnord in 1998, MB manufactures standard and custom precision mounted bearings and inserts -- pillow blocks, flange units, take-up units, flange brackets and hanger units.

W.M. Berg, Inc. is located in Rockaway, New York. Berg specializes in manufacturing and distributing miniature precision mechanical components. The Berg miniature bearing line includes ball, roller, needle, nonmetallic, sintered, spherical, thrust and oilless. Sizes range from 3/64" to 1/2".

eBearing was able to ask Carlyle about their plans for the future of Rexnord's bearing businesses.

A Carlyle spokesman told eBearing, "Rexnord's bearing operations are in integral part of the company and a critical component to providing power transmission products to the industries served by Rexnord. We view these as premium brands that we expect to grow in the future."

We asked specifically if Carlyle intends to operate or divest the bearing businesses, and the spokesman reiterated, "There are no plans to divest these operations and they will continue to be operated under the Rexnord umbrella."

Carlyle has extensive experience in various manufacturing industries, so there is little doubt about their ability or intent to continue operating Rexnord as a going concern.

George Sherman, former CEO of the Danaher Corporation, is being brought in as Rexnord's "non-executive chairman." Danaher (after Mr. Sherman left the company) recently acquired Thomson Industries, Inc., a leading manufacturer of linear bearings, ball screws, bearing balls and related products.

In another move which will impact the bearing industry, Carlyle is in advanced negotiations to acquire the automotive businesses of TRW Inc. (USA). TRW has become a Tier 1 vendor of suspension corner units to the automotive industry; as such, it is becoming a key customer for bearing companies throughout the United States and Europe.