Arlington Capital Partners has formed a new platform with the launch of Keel Holdings, a manufacturer of complex structures used in defense applications.
Keel was formed through the merger of existing Arlington portfolio company Pegasus Steel, acquired in June 2023, with the newly completed acquisitions of Metal Trades and Merrill Technologies Group.
With the merger of these three businesses, Keel’s capabilities now include design, engineering, fabrication, machining, integration, assembly, finishing, and surface treatment across nine facilities in Michigan and South Carolina. One of the company’s South Carolina locations has direct frontage to deep water that allows Keel to deliver large modules via barge to submarine and aircraft carrier customers. The combined businesses, led by CEO Brian Carter, have more than one million square feet of manufacturing floor space and approximately 700 employees.
“Keel will play a pivotal role in delivering significant capability growth to the US defense industrial base,” said Mr. Carter. “Our efficient and effective approach positions us to increase the speed of delivery and production for the country’s highest priority defense programs. I look forward to working alongside the talented teams from Pegasus, Metal Trades, and Merrill, whose hard work and expertise have laid the foundation for Keel’s emergence as a formidable and positive force in the defense industry.”
Pegasus Steel is a provider of fabricated steel structures and assemblies to the nuclear-powered shipbuilding sector and specializes in cutting, forming, machining and welding of large-scale, complex fabrications. The company’s products are used in the construction of submarines, aircraft carriers and other naval and industrial systems. Pegasus is a supplier to many of the U.S. Navy’s highest priority programs including the Columbia-class submarine, the Virginia-class submarine and the Ford-class aircraft carrier.
Pegasus, led by CEO and founder Tony Deering, is headquartered near Charlestown in Ladson, South Carolina, and operates through two facilities with an aggregate of 350,000 square feet of manufacturing space.
Merrill Technologies Group is a manufacturer of large metal parts and structures used in defense, aerospace, and industrial applications with customers that include Raytheon, General Dynamics, Lockheed Martin, Sikorsky, Northrop Grumman, and General Dynamics. The company’s metal capabilities include aluminum, carbon steel, stainless steel and special alloys.
Merrill is headquartered northwest of Detroit in Saginaw, Michigan, with 350 employees and nearly 700,000 sq. ft. of manufacturing floor space. Merrill was founded in 1968 in Merrill, Michigan, by Gary and Mary Kay Yackel and, prior to the sale to Keel, was owned by Bob and Jeff Yackel.
Metal Trades is a provider of heavy steel fabrication, manufacturing, machining, vessel construction and vessel maintenance and repair services to the Navy, Army, and commercial customers. The company’s capabilities include steel processing, fabrication, welding, piping, machining, electrical installation, blasting and painting.
Metal Trades is headquartered near Charleston in Hollywood, South Carolina, and occupies a 48 acre complex with deep water access that can accommodate vessels and barges up to 380 feet long and 72 feet wide, with up to a 15-foot draft. The company was founded in 1962 by J.E. “Ted” Corbin in Charleston, South Carolina, and was most recently owned and operated by CEO Rusty Corbin and his family.
“Keel is becoming the leading Tier 1 provider of large, fabricated structures to its OEM customers that serve the critical needs of the Navy, Army, Air Force, and DoD,” said Peter Manos, a managing partner at Arlington. “By achieving vertical integration through significant investments in facilities, equipment, and human capital, the company is prepared for the large increase in activity that it expects across its entire DoD and industrial customer base.”
“Keel is supporting the steep production ramp of the Columbia and Virginia class submarine programs by positioning itself to deliver turnkey structures and modules to its customers, empowering them to use valuable shipyard space more effectively,” said Ben Ramundo, a principal at Arlington. “We are excited to support the entire management team as the industrial logic of these transactions yields measurable benefits to Keel’s customers and the national security community.”
The formation of Keel follows Arlington’s formation in January 2024 of two other defense platforms, Kinetic Engine Systems and Verus Aerospace. Kinetic includes Cadence Aerospace which Arlington acquired from Court Square in November 2017 and three new acquisitions; Arizona-based Walbar Engine Components, Connecticut-based Numet Machining Techniques, and Connecticut-based AeroCision. Verus is a supplier of large and complex aerostructures components and is comprised of existing Arlington portfolio companies Perfekta, Precision Machine Works, Arden Engineering, Premier Processing, and Quality Forming.
Houlihan Lokey was the financial advisor to Keel and Arlington on this transaction. Charter Capital Partners was the financial advisor to Merrill Technologies Group, and Mensura Capital advised Metal Trades.
Bethesda, Maryland-based Arlington Capital invests in government-regulated industries and adjacent markets including aerospace and defense; government services; and technology, healthcare, and business services. In February 2021, Goldman Sachs Asset Management made a non-voting minority equity investment in the firm.
Earlier this week, Arlington announced the hard cap close of its latest fund, Arlington Capital Partners VI LP with total capital commitments of $3.8 billion. The new fund beats its $3.25 billion target, was significantly oversubscribed, and is the largest fund the firm has ever raised.
© 2024 Private Equity Professional | February 2, 2024
