Athol public company to merge with Kentucky private equity firm, become privately-held

Image | Courtesy of Google Maps Part of the L.S. Starrett campus in Athol

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The L.S. Starrett Co., a publicly traded tool manufacturing company founded 144 years ago, plans to merge with a private equity firm and become a privately-held company.

The Athol-based company has entered a definitive merger agreement with MiddleGround Capital, a Kentucky-based private equity firm investing in manufacturing and speciality distribution companies, according to a press release issued by L.S. Starrett on Monday.

“We are pleased to reach this agreement with MiddleGround, which provides a meaningful premium cash value to our shareholders,” Douglas Starrett, chairman of the board of directors, CEO and president of L.S. Starrett, said in the press release. “As a private company, the company will have additional financial and operational flexibility to continue providing industry-leading service and products to our customers across our markets and maintaining Starrett’s proud tradition among its employees, communities and other stakeholders.”

L.S. Starrett shareholders will receive $16.19 per share, a 63.2% premium on the $9.92 price the Starrett stock closed at on Friday on the New York Stock Exchange. Upon completion of the transaction, which is expected to close sometime in mid-2024, Starrett will become a wholly owned subsidiary of MiddleGround.

Founded in 1880 by Laroy Sunderland Starrett, L.S. Starrett now manufactures more than 5,000 different products for professional and consumer markets, with facilities in five states and additional locations in Mexico, Brazil, Scotland, and China. CEO and President Douglas Starrett is the fifth generation of the family to run the company, having taken over from his father in 2001, according to a history of L.S. Starrett published in 2015.

The company originally went public on Dec. 30, 1987 and trades on the New York Stock Exchange.

MiddleGround intends to fund the transaction with a combination of cash and committed financing. The firm has more than $3.5 billion in assets under management. Other companies in the firm’s portfolio include HLC, a Quebec-based bicycle parts and accessories distributor, and Xtrac, a manufacturer of high performance automotive transmissions that is based in England.

“MiddleGround is thrilled to be partnering with Starrett, a brand we have long admired, and a company that we have followed in the public markets for several years,” John Stewart, founder and managing partner of MiddleGround, said in the press release. “Most of MiddleGround's Operations team gained familiarity with Starrett products over the course of their manufacturing careers, and we are excited about the opportunity to further position the company for its future on the front lines of innovation, advanced manufacturing and reshoring.”