THE transaction services team in Newcastle provided financial, operational and tax due diligence support to the London-based private equity firm Pamplona Capital Management on its sale of TMD Friction to Japanese company Nisshinbo Holdings Inc.

TMD Friction is a leading manufacturer of brake friction materials in the original equipment market of the automotive industry, and currently operates across 16 manufacturing sites in 11 countries, with over 4,600 employees. The business experienced strong growth after Pamplona bought TMD in early 2009, mostly attributed to a general increase in car production, as well as growth in China, Brazil and the independent aftermarket. For the year ended December 31, 2010, TMD reported a 20% increase in sales to €637m.

The Newcastle team provided vendor due diligence as an integral part of the sales process, which attracted a large number of interested parties from around the world. The final agreed deal resulted in the sale of the business and its assets to Nisshinbo Holdings, a Tokyo-based group which has interests in a number of industries, including textiles, papers, mechatronics, chemicals, electronics and automotive brakes. The combination of Nisshinbo and TMD has created the world’s largest automotive brake friction manufacturers with combined revenues of more than €1bn and more than 6,000 employees.

Mark Webster, transactions services partner, said “We were delighted to assist Pamplona in achieving an exit to a trade buyer. The vendor due diligence exercise played an important part in enabling Nisshinbo to confirm its initial interest and proceed to completion quickly without the need for extensive additional time consuming investigation. The fact that the deal completed against a backdrop of turmoil in the Eurozone clearly evidences Nisshinbo’s enthusiasm for the market and its confidence in TMD”.

:: Mark Webster is transactions services partner at PwC in the North East, tel: 0191 269 4011 or email: mark.webster@uk.pwc.com