Archives for November 19, 2013

Teachers’ Acquires Burton’s Biscuits

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Ontario Teachers’ Pension Plan (Teachers’) has agreed to acquire Burton’s Biscuit Company from Canadian Imperial Bank of Commerce and Apollo Global Management. The acquisition of Burton’s is being led by Teachers’ private equity investment division, Teachers’ Private Capital (TPC). Burton’s management team will maintain a significant minority stake in the company. The transaction is expected to close prior to the end of November.

Burton’s Biscuit Company is a branded and private label supplier of biscuits and snacks. Brands include Maryland, Jammie Dodgers and Wagon Wheels. The company also bakes Cadbury biscuits under a license agreement. Recent annual sales were more than £340 million. Burton’s is headquartered in St. Albans, UK, and operates manufacturing sites in Blackpool, Edinburgh, Llantarnam, and a chocolate refinery in Moreton, employing over 2,000 people (www.burtonsbiscuits.com).

“We look forward to supporting Burton’s outstanding management team to grow the business in the UK and further into overseas markets. There are also many strategic acquisitions to consider in those territories that can enhance these ambitious growth plans,” said Jo Taylor, head of Teachers’ London office. “With its portfolio of iconic brands, Burton’s is set to lead the premium biscuit market for some time to come and use product innovation to appeal to consumers looking for delicious treats and snacks inside and outside the home.”

Teachers’ Private Capital is one of the world’s largest private equity investors, having participated as a long-term investor in numerous management buyouts in Canada, the United States and Europe. It is the private investment department of the Ontario Teachers’ Pension Plan, the largest single-profession pension plan in Canada. Teachers’ Private Capital is based in Toronto with offices in New York and London (www.teachersprivatecapital.com).

“We are delighted that Teachers’ will shortly acquire Burton’s Biscuit Company. During this process we have met with over 30 different potential buyers and, as significant co-investors going forward, it was critical for the management team to find the right partner,” said Ben Clarke, Burton’s CEO. “With their combination of extraordinary financial firepower, true partnership approach and global expertise, it is clear to me that
Teachers’ is the ideal partner for us. We are very excited about working with Jo Taylor and his team as we pursue our ambitious plans for growth both in the UK and internationally.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-19-13

American Securities Acquires Tekni-Plex

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American Securities has entered into an agreement to acquire Tekni-Plex, a packaging and tubing company, from Oaktree Capital Management which acquired the company in 2008. The transaction is expected to close by the end of the year.

Tekni-Plex is a manufacturer of packaging and tubing materials used in the healthcare, food and specialty packaging markets. The company’s products include closure liners, medical tubing, high-barrier pharmaceutical films, medical compounds, dispensing components and thermoformed containers. Tekni-Plex is headquartered in King of Prussia, PA and operates 25 manufacturing facilities across nine countries (www.tekni-plex.com).

“We found Tekni-Plex very attractive given our strategy of investing in market-leading companies,” said David Horing, Managing Director at American Securities. “We believe the company is poised for a strong future and look forward to bringing our resources to bear to support CEO Paul Young and his team for Tekni-Plex’s continued success.”

American Securities invests in businesses with $500 million to $2 billion of revenues. Investments are undertaken with conservative financial structures that typically include only equity and senior debt. The firm aims to invest $150 million to $500 million of equity capital in each portfolio company. Sectors of interest include industrial manufacturing, specialty chemicals, aerospace and defense, energy, business services, healthcare, media, restaurants, and consumer products. The firm has more than $8 billion of capital under management and is currently investing from its sixth fund. American Securities has offices in New York and Shanghai (www.american-securities.com).

Oaktree Capital Management makes investments in distressed debt, real estate, high yield and convertible bonds, specialized private equity, emerging market and Japanese securities and mezzanine finance. The firm has over 700 employees and $79 billion in assets under management and is headquartered in Los Angeles (www.oaktreecapital.com).

Goldman, Sachs & Co. served as financial advisor to Tekni-Plex, and Paul, Weiss, Rifkind, Wharton & Garrison served as the company’s legal advisor. Houlihan Lokey and BMO Capital Markets Corp. served as financial advisors, and Weil, Gotshal & Manges served as legal advisor to American Securities.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-19-13

Palm Beach Capital Acquires CTS Engines

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Palm Beach Capital has acquired 60% of the membership interests of CTS Engines, from Neff Capital Management, which will retain a 40% ownership. Brian Neff, the Managing Partner of Neff Capital Management, will remain as Chief Executive Officer of the CTS Engines.

CTS Engines is a provider of maintenance, repair, and overhaul services to owners and operators of jet engines worldwide. In its 60,000 square foot engine service center, located in Ft. Lauderdale, the company offers complete engine overhauls on the CF6 engine platform, including the CF6-50, CF6-80A, and CF6-80C, as well as other mature jet engine platforms. The company was founded in 2002 and is headquartered in Ft. Lauderdale (www.ctsengines.com).

“With this investment, CTS has the financial foundation to capitalize on the inherent growth within the mature engine MRO market,” said Brian Neff. “For many years, Palm Beach Capital has demonstrated success in partnering with management to grow companies. Going forward into 2014, when we expand our services beyond the CF6 platform and add development engine testing, we will rely on our partner to help us maximize opportunities as they develop.”

Palm Beach Capital makes control and non-control investments of $3 million to $20 million in companies with enterprise values from $10 million to $100 million and that have a minimum EBITDA of $3 million. The firm is both industry and location agnostic. Since founding in 2001, Palm Beach Capital has made investments in 37 companies and has approximately $325 million in total assets under management. The firm has offices in West Palm Beach and Tampa (www.pbcap.com).

“We are extremely pleased to partner with Brian Neff and his management team as they work to take CTS to the next level,” said Nate Ward, Partner and Co-Founder of Palm Beach Capital. “We believe that the fundamentals of the mature jet engine market are compelling and require a specialized maintenance, repair, and overhaul focus.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-19-13

Centerbridge Acquires Inland Industrial Services

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Aquilex, the parent company of Aquilex HydroChem, a provider of industrial cleaning services and a portfolio company of Centerbridge Partners, has entered into an agreement to acquire Inland Industrial Services Group, an industrial cleaning company owned by Strength Capital Partners.

Inland Industrial Services Group is an industrial cleaning company serving the refining, chemical processing, pulp and paper, alternative fuels, steel, power, automotive, and airport end-markets in the Gulf Coast and Central United States. The company was founded in 1985 and is based in Detroit (www.teaminland.com).

Aquilex HydroChem is a provider of industrial cleaning services to the petrochemical, refinery, power, and pulp and paper markets. Services include hydroblasting, industrial vacuuming, chemical cleaning and tank cleaning. The company is headquartered in Deer Park, TX (www.hydrochem.com).

Upon closing of the transaction the combination of Inland Industrial and Aquilex will result in a company with annual revenues of approximately $400 million.

HydroChem will finance the acquisition with proceeds from a new credit facility underwritten by General Electric Capital Corporation.

“Since our original investment in HydroChem in February 2012, we have supported the company’s investment in equipment and technology. The company’s management team, led by Gary Noto and assembled under the leadership of our Chairman, Donovan Boyd, has delivered strong performance, and the acquisition of Inland is the culmination of a strategic undertaking aimed at expanding into new end-markets and geographies by leveraging our core competencies,” said Kyle Cruz, Senior Managing Director at Centerbridge.

Centerbridge Partners invests from $50 million to $300 million in US based leveraged buyouts and distressed securities. The firm has $20 billion of capital under management and is based in New York (www.centerbridge.com).

Strength Capital Partners invests in companies that have from $5 million to $20 million of EBITDA and are based throughout the greater Midwest and Central United States. Sectors of interest include manufacturing, distribution, industrial, business and financial services, infrastructure, and consumer products. The firm is based near Detroit in Birmingham, MI (www.strengthcapital.com).

“We thank the Inland leadership team and employees for their service and are thrilled with the transaction. HydroChem is the right owner for the long-term growth of the combined business, and Inland’s specialized capabilities, extensive branch network, diverse customer base and experienced employees are a valuable addition to HydroChem,” said Mark McCammon, Managing Partner of Strength Capital Partners.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-19-13

Pulse Equity and PineBridge Invest in Urgent Care of Connecticut

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Pulse Equity Partners and PineBridge Investments have made a growth equity investment in Urgent Care of Connecticut, a network of urgent care centers.

The new capital will be used by Urgent Care of Connecticut (UCC) to expand throughout the Northeast. UCC plans to grow both organically and through acquisitions.

“We are enthusiastic about our partnership with Pulse and PineBridge, which positions us well to execute on our plan to open numerous centers in locations already identified in Connecticut and elsewhere by the end of 2014,” said Chief Medical Officer and co-founder Dr. Jeannie Kenkare.

UCC operates seven urgent care centers and provides urgent medical treatment and routine care for illnesses (colds, flu, viruses), injuries (sprains, strains, fractures), and other services (X-rays, EKG’s, IV fluid, IV medication). UCC’s clinics are open 365 days and are staffed by board certified/eligible physicians. The company is headquartered in Brookfield, CT (www.ucofconnecticut.com).

At $14 billion annually, the urgent care industry is a rapidly growing sector of the U.S. healthcare system. Demand is being driven by crowded emergency rooms, primary care doctor shortages, and lower cost structures. “Urgent care has become an increasingly important part of the healthcare delivery system and UCC has a best in class platform on which to build,” said Douglas Lehrman, Founder and CEO of Pulse Equity.

Pulse Equity Partners invests from $10 million to $100 million in companies active in the health and wellness industries. The firm is based in New York (www.pulsequity.com).

PineBridge Investments manages $69 billion in assets for institutional and individual clients in listed equity, fixed income, private equity and hedge fund markets. The firm has approximately 800 employees in 32 countries and is based in New York (www.pinebridge.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-19-13

JLL Partners Teams Up With Royal DSM

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Private equity firm JLL Partners and Royal DSM, a life sciences and materials sciences company, have partnered to create a new contract development and manufacturing organization (CDMO) for the pharmaceutical industry.

The name of the company (temporarily called NewCo) will be announced in the coming months. NewCo will be formed by combining Royal DSM’s business group, DSM Pharmaceutical Products (DPP), with JLL’s portfolio company, Patheon. Annual sales for the NewCo are projected to be $2 billion. NewCo will have an end-to-end offering from finished dosage (drug products) to active substances (APIs) and a global footprint of 23 locations across North America, Europe, Latin America and Australia with about 8,300 employees.

“This partnership demonstrates JLL’s commitment to building companies that create value, fill unmet needs and drive excellence within their respective industries. This is the strategic initiative and execution ‘know how’ that stakeholders have come to expect from JLL. NewCo is poised to transform the CDMO industry and we are excited to bring these two entities together,” said Paul Levy, Managing Director of JLL Partners.

The highlights of the transaction are as follows:

  • NewCo will be owned by JLL (51%) and DSM (49%).
  • JLL will contribute $489 million in cash to NewCo and DSM will contribute DSM Pharmaceutical Products and receive a seller note of $200 million, thereby valuing DPP at $670 million.
  • NewCo will acquire Patheon for $9.32 per share in cash resulting in a total enterprise value for Patheon of approximately $1.95 billion.
  • Committed financing to be funded at closing of $1.65 billion has been secured from J.P. Morgan, UBS, Jefferies, Morgan Stanley and KeyBank.
  • Jim Mullen, currently CEO of Patheon, will be appointed CEO of NewCo upon completion of the transaction.
  • The transaction is expected to close in the first half of 2014.

Patheon is a provider of pharmaceutical development services and commercial contract manufacturing services to pharmaceutical and biotechnology companies. The company has a fully-integrated service offering, ranging from analytical development and pre-formulation to commercial manufacturing. In the 12 months ending July 31, 2013 the company had revenues of $943 million and EBITDA of $188 million. Patheon has over 5,900 employees across its network of facilities in the United States, Canada, Europe and Mexico. Patheon is a public company listed on the Toronto Stock Exchange under the symbol PTI. JLL Partners first invested in Pantheon in 2007 (www.patheon.com).

DSM Pharmaceutical Products (DPP) is a provider of contract development and manufacturing services to the pharmaceutical, biopharmaceutical and agrochemical industries with a focus on drug products and other active substances. In 2012, DPP had net sales of $734 million and had approximately 2,400 employees (www.dsm.com).

JLL Partners seeks to invest in companies across a range of manufacturing and service industries. Sectors of specific interest include healthcare services, medical products, food and consumer products, chemicals, broadcasting, transportation, automotive, industrial manufacturing, and distribution. JLL Partners is based in New York (www.jllpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-19-13