NAUGATUCK — The Eastern Company has acquired a Wisconsin-based manufacturer of aftermarket mirrors and camera systems for trucks and motorhomes to add to its portfolio of businesses.
The company announced Tuesday it has acquired Velvac Holdings, agreeing on a $39.5 million purchase price with additional payments contingent on Velvac hitting certain profit benchmarks.
The Eastern Company is a 159-year-old maker of custom-engineered products including industrial hardware, security products and metal castings.
Velvac, founded in 1934 as The Vacuum Power Equipment Company, serves the heavy and medium duty truck, motor home and bus markets selling its product line of 4,000 aftermarket components and vision systems through aftermarket channels and directly to Original Equipment Manufacturer dealers and distribution centers.
The acquisition expands The Eastern Company’s holdings from 13 worldwide locations to 16 and boosts its total employment to about 1,250 workers, said John L. Sullivan III, Eastern’s vice president and chief financial officer.
Velvac is an innovator of proprietary vision systems for commercial vehicles and trucks, the company stated. The company introduced its first camera-enabled vision system in 2006 and now sells about 45,000 camera-enabled units annually.
Velvac, which earned its current name in 1940 in response to the company’s Velvet Vacuum Brakes brand, recorded net sales of $58.6 million in fiscal year 2016.
The company recently introduced its Road-iQTM 360-degree view camera, recording and communication system and also announced TrailerLink, a patent-pending system that uses video to align tractors and trailers.
“We are delighted to add Velvac to our portfolio of businesses,” said August Vlak, Eastern’s president and chief executive officer. “Velvac represents an excellent fit for Eastern and helps us expand our presence in the truck and motorhome markets. This transaction also adds a new growth platform, with significant potential to expand margins in the future.”
Vlak, in a statement, said Velvac will continue to be run by Jeff Porter, Velvac’s president and chief executive officer. The company was owned by private equity firm Prospect Partners.
“We are proud of the team and the business we have built over the past 11 years with the support of Prospect Partners,” Porter said in a statement. “Eastern now gives us the stable, knowledgeable platform we need to grow, and we are excited to partner with Eastern to help take Velvac to the next level.”
Sullivan said the Eastern Company has been looking at acquisitions to help grow the company, looking for companies that have the same kind of business model of selling engineered products to OEM customers.
“For us it is a natural fit for the Eastern Company,” Sullivan said. “We feel with the two companies we can leverage off each other’s products, abilities and markets.”
Eastern’s stock, which trades on Nasdaq as EML, closed up 5.66 percent, or $1.20, at $22.40 per share Tuesday.