Carlyle, General Dynamics Do A Deal

On a day when the Dow Jones Industrial Average dropped 5 percent, two of the Washington region's biggest corporate names - private-equity giant Carlyle Group, and defense/aerospace General Dynamics - announced a deal.

Carlyle sold AxleTech International to Falls Church-based General Dynamics for an undisclosed amount.

Carlyle bought AxleTech in 2005.

AxleTech makes axles, axle components, independent suspensions, brakes and other vehicle parts for military vehicles, commercial specialty trucks, and off-highway machines used in a variety of industries.

Since this column is called "Value Added," I asked a Carlyle spokesman what the private equity firm did to improve AxleTech.

"The key value added here was growth from within and acquisition growth," said Carlyle spokesman Chris Ullman. "They were able to produce additional products that were derivative of, and complimentary to, their existing product line."

Translation: they added more kinds of axles to expand sales and they bought companies that added customers.

For example, the company now sells to new markets such as the one for off-road vehicles, and they sell more things to the U.S. Department of Defense.

Under Carlyle, the number of employees at AxleTech doubled. AxleTech International employs approximately 1,000 workers worldwide.

It is based in Troy, Mich., and has manufacturing facilities in Oshkosh, Wis.; Detroit, Michigan; Chicago, Illinois; St. Etienne, France; and Osasco, Brazil.

Carlyle has $91 billion under management, and about $40 billion in cash that it has committed from clients but has not yet invested.

General Dynamics, which makes everything from submarines to those snazzy Gulfstream private jets, is pretty healthy, posting a $634 million net profit in the third quarter, a 16 percent increase over the same period last year.

By Tom Heath  |  November 19, 2008; 4:28 PM ET  | Category:  Value Added
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