Blackstone Group agrees to acquire Gates Global for $5.4 billion

Blackstone Group agreed to acquire industrial-products maker Gates Global Inc. from Onex Corp. and Canada Pension Plan Investment Board for $5.4 billion.

Gates, which makes power transmission belts, fluid hoses and other industrial equipment, filed in December for an initial public offering of stock as Toronto-based Onex and Canada Pension Plan planned an exit of their investment. Denver-based Gates, led by Chief Executive Jim Nicol, posted sales of about $2.9 billion for the year through September.

Gates sells products to customers including Deere & Co., Daimler and Bombardier Inc., with North America accounting for half its sales, according to a filing with the Securities and Exchange Commission.

“It was a tough decision to sell Gates,” Seth Mersky, an Onex senior managing director, said in a statement. “We don’t see many industrial businesses with its global brand recognition.”

The acquisition will be New York-based Blackstone’s biggest private-equity deal since taking over Hilton Worldwide Holdings Inc. seven years ago. The firm’s deal-making has been stagnant as rallying stock markets in 2013 led to high prices that the firm chose to pass on. Its private-equity group deployed $5 billion from its funds last year, the same as in 2012, as Blackstone kept “getting outbid,” President Tony James said.

Private-equity deals globally stand at $164.8 billion this year, a 48% increase from the same period last year, according to data compiled by Bloomberg.

Blackstone acquired Hilton in 2007 for $26 billion. The firm’s real estate funds purchased Centro Properties Group’s U.S. shopping centers for $9.4 billion in 2011.