Arcline Acquires Hydraulics International for A&D Growth

Arcline Investment Management, a prominent growth-oriented private equity firm, is strategically enhancing its industrial holdings with the definitive agreement to acquire Hydraulics International, Inc. (HII). This move positions Arcline to capitalize on the robust demand within the aerospace, defense, and specialized industrial sectors, integrating a company renowned for its mission-critical ground support and testing solutions.

Established in 1976, HII has cultivated a formidable reputation over nearly five decades as a global leader in designing, manufacturing, and providing aftermarket support for advanced hydraulic, pneumatic, and electro-mechanical systems. The Chatsworth, California-based firm's specialized equipment is indispensable for aircraft maintenance, flight-line operations, and comprehensive testing, serving a diverse international clientele that includes U.S. and allied defense forces, prime contractors, government entities, and various industrial enterprises requiring high-performance flow control applications. This deep-rooted expertise and global reach make HII a compelling asset in a market valuing reliability and precision.

Arcline Investment Management, which oversees more than $20 billion in assets, is known for its strategy of building what it terms 'Industrial Compounders' – market-leading platforms designed for sustained earnings growth. The acquisition of HII aligns perfectly with this philosophy, adding a resilient business with a strong engineering foundation and a track record of innovation in demanding environments. This transaction underscores Arcline's commitment to investing in companies that provide essential services and products to critical infrastructure sectors.

A spokesperson for Arcline highlighted HII's established position as a trusted partner within the aerospace and defense ecosystem, emphasizing the company's engineering prowess and reputation for dependable solutions. They expressed enthusiasm for collaborating with the HII team to further expand capabilities and strengthen customer relationships globally. Similarly, Bahman Seifollahi, Chief Executive Officer of HII, conveyed immense pride in the company's half-century legacy of technological advancement and strong client bonds, anticipating that Arcline's growth-centric approach and sector insights will propel HII into its next phase of development.

The global aerospace ground support equipment market, valued at approximately $4.5 billion in 2023, is projected to grow at a compound annual growth rate (CAGR) of over 5% through 2030, driven by increasing air traffic, fleet modernization, and heightened defense spending. Private equity firms are increasingly drawn to this segment due to its stable revenue streams, long-term contracts, and high barriers to entry. HII's specialized focus on mission-critical applications positions it favorably within this expanding landscape, offering significant upside potential for Arcline's investment.

Advisory roles for the transaction saw RBC Capital Markets providing financial counsel to Arcline Investment Management. On the side of Hydraulics International, Inc., financial advisory services were rendered by Guggenheim Securities and Lazard. This strategic acquisition is poised to create substantial value by combining HII's operational excellence with Arcline's capital and strategic guidance, reinforcing both entities' positions in their respective markets.