May 24, 2016
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Archives for May 24, 2016

Ares to Buy American Capital

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ares nf11Ares Capital has agreed to acquire American Capital in a cash and stock transaction valued at $3.4 billion. On a combined pro forma basis the companies would have more than $13 billion of investments at fair value as of March 31, 2016. The boards of both companies have unanimously approved the transaction.

acas nf57American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in lower and middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda (www.AmericanCapital.com).

In November of last year, ACAS hired Goldman Sachs and Credit Suisse to assist the company in undertaking a strategic review of all corporate finance alternatives. The review considered all alternatives for maximizing shareholder value, including a sale of the entire company or a sale of various business lines. In January the strategic review was completed and the board authorized the company to proceed with the solicitation of offers to purchase all of ACAS or any of its business lines.

ACAS shareholders will receive $1.5 billion in cash from Ares Capital (NASDAQ:ARCC) and 111 million Ares Capital shares currently valued at $1.7 billion. In addition, Ares Management (NYSE:ARES) will pay $275 million of cash to ACAS shareholders at closing. Following the transaction, Ares Capital shareholders will own approximately 74% of the combined company and ACAS shareholders will own the balance of 26%.

Kipp deVeer nf1“Similar to the strategy we utilized in our acquisition of Allied Capital in 2010, we plan to leverage our origination platform to redeploy the ACAS portfolio into directly-originated investments generating a higher level of current income and ultimately improved risk-adjusted returns,” said Kipp deVeer, Chief Executive Officer of Ares Capital. Ares Capital is headquartered in New York with additional offices across the country (www.arescapitalcorp.com).

“The growing demand for capital from middle market borrowers has created the need for flexible capital providers like us to fill the financing gap as banks continue to retrench from the market,” said Michael Arougheti, Co-Chairman of Ares Capital’s Board of Directors. “We believe this transaction materially enhances our presence as a market leading direct lender with the size and scale to capitalize on the attractive competitive dynamics in the market today and for the foreseeable future.”

Prior to closing, ACAS is permitted to continue its plan to sell certain portfolio investments with the proceeds used to retire indebtedness or to remain in cash. Ares/ACAS will remain externally managed by Ares Capital Management and all current Ares Capital officers and directors will remain in their current roles.

Wells Fargo Securities (www.wellsfargo.com) and Bank of America Merrill Lynch (www.baml.ccom) served as financial advisors to Ares Capital. Goldman Sachs & Co. (www.gs.com) and Credit Suisse (www.credit-suisse.com) served as financial advisors to American Capital.

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 5-24-16

Sun Re-Enters Convenience Store Sector

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admiral nf1Sun Capital Partners has acquired Admiral Petroleum Company and Lemmen Oil Company (Admiral), a convenience store operator based in the Midwest.

admiral nf11The operations of Admiral include 130 Admiral-branded gas and convenience stores and nine Lemmen-branded gas and convenience stores located in Michigan and Indiana. The company has approximately 1,400 employees and has been owned and operated by the Lemmen family since 1905. Admiral is headquartered near Grand Rapids in Coopersville, MI (www.admiralpetroleum.com).

Sun Capital has named Jeff Turpin as Admiral’s new CEO. Mr. Turpin previously served as Chairman and CEO of VPS Convenience Store Group, a portfolio company of Sun Capital that was sold in June 2015 to GPM Investments (part of Israel-based Petro Group).  Mr. Turpin had been with VPS since 1995.

Marc Leder nf5“Admiral has been an innovator in the convenience store sector, and we look forward to building on the business’ strong reputation as it explores new growth opportunities,” said Marc Leder, Co-CEO at Sun Capital. “We’re excited to once again partner with Jeff Turpin, whose proven track record in this industry is second to none. I’m confident his deep experience and operational know-how will be invaluable as Admiral charts an exciting course forward.”

sun capital nf33Sun Capital invests in leveraged buyouts, equity, and debt in companies that can benefit from its in-house operating professionals and experience. Sun Capital has invested in and managed more than 320 companies worldwide since its founding in 1995. The firm has offices in Boca Raton, Los Angeles and New York; and affiliates in London, Frankfurt, Stockholm and Shenzhen (www.SunCapPart.com).

“Over the course of more than a century, the Lemmen family successfully built an enduring business,” said Sun Capital Principal Jared Wien. “We look forward to collaborating with Jeff and the Admiral management team to help the company reach its potential through operational enhancements, organic growth and strategic acquisitions.”

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 5-24-16

AEI Acquires AC&A

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ACA nf1AE Industrial Partners (AEI) has acquired AC&A, a maker specialty parts and tooling used in the aerospace industry.

AC&A is a provider of composite/metallic parts and tooling used in the space, aerospace, unmanned aerial vehicle, defense, industrial, and specialty automobile markets. The company was founded in 2004 and is based in Lake Forest, CA (www.acamfg.com).

david rowe“Each of AC&A’s major market segments – aerospace and defense, space, and specialty automobile – offers substantial potential for growth,” said David Rowe, Managing Partner of AEI. “AC&A’s strong customer relationships, highly specialized technologies, and cutting-edge capabilities make it a unique supplier within these high-growth sectors. AC&A is truly a ‘one stop shop’ for design, development, and fabrication that has created a unique solution for its customers.”

ae industrial nf4AEI invests in the aerospace, power generation and specialty industrial sectors with a specific focus on technical manufacturing, distribution and supply chain management, MRO (maintenance, repair and overhaul) and industrial service-based businesses.  Typical company targets will have from $50 million to $500 million of revenue. AEI is headquartered in Boca Raton (www.aeroequity.com).

“AEI, with its longstanding involvement in aerospace and related technologies, understands the potential of our company,” said Justin Uchida, CEO and COO of AC&A. “AEI’s expertise and financial support will enable AC&A to grow our business with both new and existing customers.”

Janes Capital Partners (www.janescapital.com), an investment bank that specializes in the aerospace and defense sector, was the financial advisor to AC&A.

Kirkland & Ellis (www.kirkland.com) advised AEI and PricewaterhouseCoopers (www.pwc.com) served as financial advisor.

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 5-24-16

Court Square to Sell Wyle

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wyle nf1Publicly-traded KBR, Inc. has entered into an agreement to acquire Wyle, a portfolio company of Court Square Capital Partners, for $570 million in cash. Court Square acquired Wyle in June 2009 from Littlejohn & Co. which had acquired the company in 2003.

wyle nf88Wyle is a provider of engineering, professional, scientific and technical services primarily to the US federal government including the Department of Defense and NASA.  Specific services provided by Wyle include systems engineering, life science research, space medical operations, information technology, and testing and evaluation of aircraft. Wyle has approximately 4,000 employees and annual revenues of $900 million. As of year-end 2015, Wyle’s funded backlog was $440 million with an additional $1.1 billion of orders not yet funded, but expected. The company was founded in 1949 by Frank Wyle and is headquartered in El Segundo, CA (www.wyle.com).

The $570 million purchase price for Wyle will be funded by availability under an existing KBR line of credit and approximately $200 million in cash. The transaction is expected to close by September 2016.

p0710CPoec.inddKBR is an engineering, procurement, and construction company with annual revenues of approximately $7 billion. The company is a former a subsidiary of Halliburton and was previously known as Kellogg Brown & Root. KBR is headquartered in Houston (www.kbr.com).

Wyle will become a KBR business unit within KBR’s Government Services segment. According to KBR the acquisition will combine KBR’s strengths in international, large-scale government logistics and support operations with Wyle’s specialized technical services, which are largely focused in the US.

“Adding Wyle’s highly specialized and differentiated offerings to our global government services portfolio improves KBR’s overall risk profile by expanding into other government funding sources for higher-margin and largely cost-reimbursable work,” said Stuart Bradie, President and CEO of KBR. “The acquisition is expected to be accretive in the first year and provide longer term synergistic opportunities in markets where KBR’s large-scale logistics and project management capabilities combine with Wyle’s specialized technical capabilities.”

court square nf22Court Square Capital Partners invests in middle market companies that are active in the business services, general industrials, healthcare, and technology/telecommunications sectors. Court Square currently manages approximately $5 billion of capital and is based in New York (www.courtsquare.com).

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 5-24-16

Huron and RLG Acquire InterVision Systems

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intervision nf1Huron Capital Partners has acquired InterVision Systems, an IT services provider. The transaction was completed in partnership with RLG Capital and senior members of the InterVision management team.

intervision nf33InterVision provides cloud and enterprise IT services including architecture, integration and configuration, installation, maintenance contract renewals, staff augmentation, project management, and managed services. The company was founded in 1993 and is led by its CEO Whitney Tomlin. InterVision is headquartered in Santa Clara, CA with additional offices in San Francisco, El Segundo, and Bellevue, WA (www.intervision.com).

Matt Hare nf1“With our history of investing in business services companies, we think InterVision will be a great fit in the Huron Capital family,” said Matt Hare, Huron Capital Principal. “The IT services market is large and growing, and we believe InterVision is well-positioned to capitalize on that trend.  We will be working closely with Whitney and the team to pursue opportunities for growth, both organically and through acquisition.”

Huron Capital Partners invests up to $70 million per transaction in middle market companies that have revenues up to $200 million and EBITDAs of $5 million or more. Sectors of interest include specialty manufacturing, business services, consumer goods & services, and healthcare.  The firm was founded in 1999 and currently manages over $1.1 billion in committed equity through four private equity funds. Huron Capital Partners has offices in Detroit and Toronto (www.huroncapital.com).

rlg nf22RLG Capital invests in companies with enterprise values from $20 million to $200 million that are active in the aerospace, banking, business services, energy, technology, transportation, and utility infrastructure sectors. The firm is based in Park City, UT (www.rlgcap.com).

© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 5-24-16

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