There's a chance that the Gates Corp., an iconic Denver brand, could regain its independence if reports floating around Wall Street pan out.

Onex Corp., the Toronto-based private equity owner of the maker of automotive and industrial components, is looking to either sell Gates or take it public in an initial stock offering, the Wall Street Journal reported Wednesday, citing unnamed sources.

A spokesperson with Gates declined to comment on "speculative press articles."

Onex, together with the Canada Pension Plan Investment Board, purchased Tomkins PLC, the London-based parent of Gates, back in 2010 for $4.5 billion.

"They bought this in the depths, when things weren't going well in automotive," said Mark Sunderhuse, a managing partner at Red Rocks Capital, a Golden money manager that has 3.56 percent of its actively managed portfolio invested in Onex.

Since that well-timed purchase, Onex has sold off several Tomkins and Gates units, reaping more than $2.5 billion. Those lucrative sales combined with strong cash flows have allowed Onex to recoup most of its initial equity investment and pay off much of the debt used in the leveraged buyout.


Assuming a buyer is willing to pay 10 times the company's operating profits of $551.4 million last year, that would represent a $5.5 billion price tag for Gates, which Sunderhuse called a "tasty gravy."

"It will be a function of price and terms and what keeps the company healthy," Sunderhuse said regarding whether Onex pursue an outright sale or a stock offering.

A stock offering could generate a higher payout, but it would also require Onex to hold onto Gates' shares for a longer period, he said.

Charles Gates Jr. sold the privately-held Gates Rubber Co. in 1996 for $1.16 billion after failing to find a successor within the family to run the company.

His father, Charles Sr., bought the Colorado Tire & Leather Co. in 1911 for $3,500 and over the years Gates became famous for innovations such as the reinforced rubber V-belt and radiator hoses and employed thousands of Denverites.

The pared down Gates looks more like the original business, but one with a much broader global reach.

Although Gates no longer manufactures in Colorado, its global headquarters is located at 1551 Wewatta St., and the company employs about 400 people in metro Denver.

Aldo Svaldi: 303-954-1410, or