Archives for November 13, 2014

Berkshire Hathaway to Acquire Duracell

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Berkshire Hathaway will acquire Duracell, a subsidiary of Proctor & Gamble, in exchange for shares of Proctor & Gamble currently owned by Berkshire Hathaway.  The transaction is expected to close in the second half of 2015.

Berkshire’s stock ownership in P&G is currently valued at approximately $4.7 billion. P&G said it expects to contribute approximately $1.8 billion in cash to the Duracell Company prior to the close of the transaction.   The value received for Duracell in the exchange is approximately 7x fiscal year 2014 adjusted EBITDA. This equates to a cash sale valued at approximately 9x adjusted EBITDA.

“I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette,” said Warren Buffett, Berkshire Hathaway chief executive officer. “Duracell is a leading global brand with top quality products, and it will fit well within Berkshire Hathaway.”

The P.R. Mallory Company introduced the Duracell brand in 1964.  P.R. Mallory was acquired by Dart Industries in 1978, which in turn merged with Kraft in 1980. Kohlberg Kravis Roberts bought Duracell in 1988 and took the company public in 1989. It was acquired by Gillette in 1996. In 2005 Procter & Gamble acquired Gillette.

Today, Duracell is a manufacturer and marketer of alkaline batteries in many common sizes, such as AAA, AA, C, D, and 9V. Lesser-used sizes such as AAAA (primarily for pagers, penlights, and blood glucose meters) and J size batteries (for hospital devices and photographic strobe flash units) are also manufactured along with a range of “button” batteries using zinc-air, silver-oxide and lithium chemistries, used in calculators, watches, hearing aids, and other small (mostly medical related) devices. Duracell batteries are also bulk packaged for end users under the brand name Procell.  Duracell is based in Bethel, CT (www.duracell.com).

Goldman Sachs & Co. is acting as financial advisor to Proctor & Gamble.

2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14

Golden Gate Acquires ANGUS Chemical Company

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Golden Gate Capital has entered into an agreement to acquire ANGUS Chemical Company from The Dow Chemical Company for $1.215 billion.  Members of ANGUS’ senior management team are expected to transition with the business following the close of the transaction.

ANGUS Chemical Company develops and manufactures nitroalkane-based chemicals. The company’s products are used in applications such as paint and coatings, metalworking fluids, personal care and cosmetics, life science utilities, pharmaceutical intermediates, rubber, leather and agricultural intermediates. ANGUS’ headquarters and R&D facilities are located in the Chicago suburb of Buffalo Grove.  Manufacturing facilities are based in Sterlington, LA; Ibbenbueren, Germany; and a packaging factory located in Niagara Falls, NY (www.dow.com/ANGUS).

“ANGUS is widely recognized as one of the world’s leading specialty chemical companies, and we are excited by the growth potential of this business,” said Rajeev Amara, Managing Director at Golden Gate Capital. “With an exceptional reputation, skilled management team, and unique technologies and capabilities, ANGUS is well-positioned to continue to provide innovative solutions to help its customers succeed in growing their businesses. The ANGUS management team has a strategic vision for the company that we are eager to support and that aligns well with our long term investment horizon.”

Golden Gate Capital targets companies across a range of industries and transaction types, including leveraged buyouts, recapitalizations, corporate divestitures and spin-offs, build-ups and venture stage investing. The firm has approximately $12 billion of capital under management and is based in San Francisco (www.goldengatecap.com).

JPMorgan Securities is serving as financial advisor to Golden Gate Capital. JPMorgan Securities, Morgan Stanley and Deutsche Bank Securities are providing financing to support the transaction.

2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14

Maxim and Falcon Acquire Integrity Directional Services

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Integrity Directional Services, a directional drilling company serving the oil and gas industry, has been acquired by Maxim Partners and Falcon Investment Advisors.

Integrity offers onshore oil and gas operators a complete line of downhole directional drilling, measurement-while-drilling, and well planning and engineering services.  Directional drilling (or slant drilling) is the practice of drilling non-vertical wells.  Integrity was co-founded in 2008 by Steve Boyd (President) and Charlie Hodges (Vice President). The company is headquartered in Fort Worth, TX with additional facilities in Houston TX; Midland, TX; Winnsboro, LA; Oklahoma City, OK; and Demascus, AR (www.integritydirectional.com).

“Integrity is very pleased to partner with Maxim and Falcon to help us grow and reach our full potential. The expertise and experience that both companies provide will be instrumental in taking Integrity Directional to the next level” said Mr. Boyd.

To facilitate strategic planning, best operating practices and industry contacts, Maxim has organized an experienced board of directors for Integrity including veteran oilfield service executives Frank M. “Mike” Davis and Manuel “Manny” Gonzalez.  Mr. Davis, who has assumed the role of Integrity’s Executive Chairman, retired from Baker Hughes International in December of 2013, lastly serving as the President of Baker Hughes US Pressure Pumping.  Mr. Gonzalez was formerly the Executive Vice President of R360 Environmental Solutions and the CEO of its predecessor, US Liquids of Louisiana, and was instrumental in R360’s growth and successful exit to Waste Connections.

“We are excited to partner with great people and a proven solution provider for leading operators,” said Rick Turner, an Industry Partner for Maxim who also serves on Integrity’s board and previously invested in directional driller MS Energy Services.  “Integrity is the second platform acquisition closed in 2014 by Maxim’s energy partnership with Falcon and we are confident in our ability to efficiently deploy more capital into the oilfield services sector.”

Maxim Partners invests in middle-market companies that have revenues of at least $10 million and EBITDA of at least $2 million. Sectors of interest include education, energy, environmental, and wellness. The firm was founded in 1991 and is based in the Chicago suburb of Hinsdale (www.maximpartnersllc.com).

Falcon Investment Advisors specializes in providing from $10 million to $75 million of subordinated debt and other junior capital to support management or leveraged buyouts, growth or acquisition capital, dividend recaps, generational transfers, structured finance and restructurings. Since its founding in 2000, Falcon has invested in more than 60 companies in a range of industries. The firm is currently investing out of Falcon Strategic Partners IV, LP, a $910 million investment fund. Falcon has offices in Boston and New York (www.falconinvestments.com).

PPHB (www.pphb.com), a Houston-based investment bank that provides financial advisory services exclusively to clients in the energy industry, served as exclusive financial advisor to Integrity.

2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14

Riverside Acquires SAFEbuilt

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The Riverside Company has acquired SAFEbuilt, a provider of community development services for local governments and public agencies.

SAFEbuilt offers a suite of services that include building department programs, planning and zoning, code enforcement and other administrative functions. Its affiliate company, Meritage Systems, provides workflow and operational support software for municipal building departments. SAFEbuilt was founded in 1992 and is based in Loveland, CO (www.safebuilt.com).

“SAFEbuilt has tremendous growth potential thanks to its compelling value proposition,” said Riverside Managing Partner Loren Schlachet. “Clients choose SAFEbuilt because of its great service, but also because the model greatly reduces the risk of running a bureaucratic department at a deficit.”

Today SAFEbuilt serves over 200 communities across the US and is the leading provider of building department services in Colorado, Georgia and Michigan. Within the last two years, SAFEbuilt has also expanded its presence into South Carolina, Ohio and Illinois as well as introducing two new service lines – planning and zoning, and code enforcement services.

Working with Mr. Schlachet on the transaction for Riverside was Vice President Brad Resnick, Senior Associate Kevin Kumar and Operating Partner Bill White. Origination Principal Scott Gilbertson sourced the transaction for Riverside.  Dave Kralic served as Finance Director for Riverside, and Vice President Dan Haynes worked on financing the transaction for the firm.

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $250 million (€200 million in Europe). Since its founding in 1988, Riverside has invested in more than 360 transactions. The firm’s international portfolio includes more than 75 companies. Riverside is headquartered in New York with additional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and London (www.riversidecompany.com).

MidCap Financial (www.midcapfinancial.com) provided financing for the transaction.

2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14

WCAS Completes Sale of TransFirst

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Welsh, Carson, Anderson & Stowe (WCAS) has completed the previously announced sale of its portfolio company, TransFirst Holdings, to Vista Equity Partners for $1.5 billion.  WCAS acquired TransFirst from GTCR in June 2007.   The WCAS equity investment in TransFirst generated a total gain $678 million, representing a 4.1x investment multiple and a 23% internal rate of return.

TransFirst is a provider of secure transaction processing services and payment technologies to the small- and medium-sized business (SMB) market.  In 2013, the company served more than 200,000 merchants and processed $42 billion in volume, ranking it as the seventh largest non-bank merchant acquirer in the US.  The company has operating facilities in Aurora, CO; Broomfield, CO; Franklin, TN and Cypress, CA.  TransFirst was founded in 1995 and is headquartered on Long Island in Hauppauge, NY (www.TransFirst.com).

“We are very proud of, and thankful for, the close partnership we have had with John Shlonsky and the entire TransFirst management team during the past several years. The company and team have demonstrated high integrity, an innovative spirit, tremendous operating rigor, and dedication to delivering exceptional service to TransFirst’s clients and partners,” said Eric Lee, General Partner at WCAS.  “We wish TransFirst every success in the future with Vista Equity Partners.”

WCAS is focused exclusively on investments in business, information and healthcare services. Since its founding in 1979, Welsh Carson has organized 15 limited partnerships with total capital of over $20 billion. The firm is currently investing through its latest fund – Welsh, Carson, Anderson & Stowe XI – and is currently raising its 12th fund with a $3 billion target. The firm is based in New York (www.welshcarson.com).

WCAS has completed a number of successful exits during 2014. In addition to TransFirst, WCAS has sold GlobalCollect, Solstas Lab Partners, Peak 10 and Matrix Medical this year. WCAS also completed the initial public offerings of Paycom Software (NYSE: PAYC), and K2M Group Holdings (Nasdaq: KTWO) in 2014.  Including pending transactions, WCAS has generated distributions to investors of approximately $5.5 billion since the beginning of 2013. This has resulted in WCAS’s investors receiving $5.41 of distributions for every $1 of capital called.

Vista Equity Partners, the buyer of TransFirst, has more than $13 billion in committed capital and makes equity investments in enterprise software businesses and technology-enabled services companies. The firm was founded in 2000 and has over 50 investment professionals operating out of San Francisco, Chicago and Austin (www.vistaequitypartners.com).

“We are very excited to enter our next phase of growth.” said TransFirst CEO John Shlonsky. “We thank Welsh, Carson, Anderson & Stowe for their strong partnership and invaluable contributions to TransFirst’s success.”

2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14

Pritzker Private Capital Goes West

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Pritzker Group Private Capital has expanded its West Coast investment team with the addition of three professionals to its Los Angeles office.

Joining Pritzker Group Private Capital in Los Angeles are former Blackstone managing director Michael Dal Bello, who is investment partner for the healthcare investment team; Ceron Rhee, vice president-healthcare, who was previously a vice president at TPG Capital in San Francisco; and Evan Earley, associate, who joined from UBS Investment Bank where he was an analyst.

Pritzker Group, led by Tony and J.B. Pritzker, has three principal investment teams: Private Capital, which acquires and operates North America-based middle-market companies in the manufactured products, services and healthcare sectors; Venture Capital, which is the largest technology venture investor based in the Midwest; and Asset Management, which partners with investment managers across global public markets.  The Pritzker Group is based in Chicago (www.pritzkergroup.com).

The three new members of Pritzker Group Private Capital team are joining the Pritzker Group Venture Capital team members already based in Los Angeles.

“Pritzker Group Private Capital continues to expand its West Coast presence and we are pleased to welcome this group to our Los Angeles office,” said Tony Pritzker, Pritzker Group managing partner, who is based in Los Angeles. “While all of our investment teams have a national mandate, we look forward to being more active investors on the West Coast given the significant opportunities we see here.”

2014 PEPD • Private Equity’s Leading News Magazine • 11-13-14