Archives for June 14, 2017

MidOcean Exits Agilex Fragrances

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MidOcean Partners has agreed to sell Agilex Fragrances, a provider of fragrance products and related creative and technical services, to Firmenich, the world’s largest privately-owned company in the fragrance and flavor business.  MidOcean acquired Agilex in December 2012.

Agilex specializes in the development and production of functional fragrance compounds which it sells to consumer and industrial products manufacturers for use as scent components in the air care, personal care, industrial & institutional and household end markets. The company is led by CEO Raymond Hughes and is headquartered in Piscataway, NJ (www.agilexfragrances.com).

During MidOcean’s ownership, the firm hired Mr. Hughes as CEO and appointed three experienced industry executives to the Agilex board including Daniel Stebbins, the former President of the flavor division of Symrise, a major producer of flavors and fragrances; Thomas Virtue, the former President of Givaudan Roure, the world’s largest flavors and fragrance provider; and Brian Connolly, the former Executive Vice President and President of North America for Avon Products.

Also during MidOcean’s ownership, Agilex completed four add-on acquisitions, accelerated new customer acquisition, increased penetration of existing customers and significantly reinvested in the business, culminating with the commissioning of a new, 60,000 square foot, state-of-the-art manufacturing center in Somerset County, New Jersey that opened earlier this year. The four add-on acquisitions were New Jersey-based Oriental Aromatics (the US assets were acquired in February 2014); CPL Aromas (2014); Texas-based Airabella (July 2015); and Texas-based Creative Fragrances (November 2016).

As a result of adding experienced operators, completing four add-on acquisitions, and providing strategic direction to the company, MidOcean realized a 5.6 times return on its invested capital, according to industry sources.

“Agilex has been an excellent investment for MidOcean and continues our strong track record of investing in high quality business in the middle market where we can bring significant strategic and operating resources to affect transformative growth,” said Jonathan Marlow, Managing Director at MidOcean. “We were very fortunate to work with Dan Stebbins and partner with Ray Hughes and his team. Agilex’s accomplishments during our partnership are representative of the value creation we look to drive and actively support in our portfolio companies.”

MidOcean invests in middle market companies active in the business and consumer services sectors.  The firm was founded in 2003 and is based in New York (www.midoceanpartners.com).

“Agilex was a prototypical MidOcean investment,” said Mr. Stebbins. “They took a deeply thematic approach to the flavors and fragrances industry, assembling a strong management team and identifying organic growth and acquisition opportunities. Agilex proved to be a terrific platform to consolidate the highly fragmented fragrances sector as it combines the superior resources and capabilities of a multi-national fragrance company with the service flexibility, responsiveness and agility of a mid-sized competitor.”

Firmenich, the buyer of Agilex, is the world’s largest privately-owned company in the fragrance and flavor business. The company has annual revenue of approximately $3.3 billion. Firmenich was founded in 1895 and is based in Geneva, Switzerland (www.firmenich.com).

Houlihan Lokey was the financial advisor to MidOcean on this transaction.

© 2017 Private Equity Professional | June 14, 2017

GI Partners Adds to Peak 10

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Peak 10, a portfolio company of GI Partners, has agreed to acquire ViaWest, a wholly-owned subsidiary of publicly-traded Shaw Communications, for $1.675 billion in cash. GI Partners is a prior owner of ViaWest. It invested in the company in May 2010 and then sold it in September 2014 to Shaw Communications.

Peak 10 provides IT infrastructure services including data center services, private and enterprise cloud infrastructure, and managed services.  The company operates 24 data centers in 10 markets in the US, primarily serving mid-sized enterprises around the globe.  Peak 10 is headquartered in Charlotte, NC (www.peak10.com). GI Partners acquired Peak 10 from Welsh, Carson, Anderson & Stowe in May 2014.

The combination of ViaWest with Peak 10 will create a company with operations in 20 domestic and international markets including Atlanta, Austin, Charlotte, Cincinnati, Dallas, Denver, Ft. Lauderdale, Jacksonville, Las Vegas, Louisville, Minneapolis, Nashville, Phoenix, Portland, Raleigh, Richmond, Salt Lake City, Tampa, Amsterdam, and Calgary. The increased scale and geographic coverage will enable the combined company to serve its customers across an enhanced platform of products and capabilities. Chris Downie, the Chief Executive Officer of Peak 10, will be the Chief Executive Officer of the combined company and Nancy Phillips, the Chief Executive Officer of ViaWest, will become the executive Chair of the Board.

“As an active investor in the IT infrastructure space for over 15 years, we are excited to bring these two growing companies together,” said David Mace, a Managing Director at GI Partners. “Peak 10 and ViaWest will be a powerful combination to support customers’ expanding data needs in domestic and international markets. We support the combined company’s commitment to service excellence and look forward to partnering with the leadership team to help drive the next phase of growth.”

GI Partners invests from $50 million to $250 million in companies with enterprise values of $100 million to $750 million.  Sectors of interest include IT infrastructure, healthcare, software, and services. The firm currently manages over $14 billion in capital commitments. GI Partners was founded in 2001 and is based in San Francisco (www.gipartners.com).

“By joining forces, Peak 10 and ViaWest will create a leading hybrid IT infrastructure and solutions provider well-positioned to deliver significant benefits to our customers,” said Mr. Downie. “This transformative transaction will expand our scale and geographic reach and we are excited to bring together two companies with cohesive operating philosophies and complementary strengths.”

Shaw Communications (TSX: SJR.B; NYSE: SJR) is a Canadian telecommunications company that provides telephone, Internet, television, and mobile services all backed by a fiber optic network. The company is headquartered in Calgary (www.shaw.ca). Shaw acquired ViaWest in 2014 for $1.2 billion and later made additional data center add-on acquisitions. Analysts have estimated that Shaw’s total invested capital and operating losses in ViaWest to be $1.4 billion resulting in a small gain on the sale of the company of approximately $275 million.

The transaction is anticipated to close in the third quarter of 2017. DH Capital was the financial advisor and Paul Hastings was the legal counsel to Peak 10 and GI Partners.

© 2017 Private Equity Professional | June 14, 2017

Tricor Founders Acquires Keybrand Foods

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Tricor Pacific Founders Capital has acquired Keybrand Foods, a maker of branded and private label wet salads, hand-rolled products and fruit salads. Tricor made its investment in Keybrand Foods through Freshstone Brands, a newly formed company owned by Freshstone Kitchen.

Keybrand Foods produces branded and private label, deli classic and home-style wet salads, hand rolled products, fruit salads, and other prepared foods for retail, food service, and co-manufacturing customers. Company owned brand names include Keybrand, Deli Classics, Johnston’s and Sun Gem. Keybrand was founded in 1963 and is based in 100 miles west of Toronto in Kitchener, ON with additional operations in Delisle, SK (near Saskatoon) and Charlottetown, PEI (www.keybrand.com).

“We look forward to working with Tricor Founders, who bring specific food industry experience and operating resources to the table and have a long-term investment horizon,” said Mike Swan, Vice President of Keybrand.

“This acquisition is consistent with our strategy of making control investments in food businesses, with EBITDA of $3 to $10 million, across Canada and the Mid-West and Western USA,” said Richard Harris, Managing Director of Tricor Founders who will lead Keybrand as the Executive Chairman of Freshstone Brands. “We are also pleased to announce the hiring of Steven Diakowsky as President and CEO of Freshstone Brands. Steve is an experienced food industry CEO, with recent stints at Taste of Nature and Allan Candy.”

“The prepared foods and home meal replacement industry is an attractive and growing market. We hope to make further acquisitions in this space adding capabilities and expanding our footprint over the next few years,” said Derek Senft, Managing Director of Tricor Founders who led the transaction.

Tricor Founders is actively building an integrated but decentralized portfolio of food businesses. Its existing portfolio is focused on prepared foods (through Freshstone Kitchen), specialty protein (through Purewater Foods), and edible gifts and confections (through Ganache Gourmet).

Tricor Founders is led by its three managing directors – Richard Harris, Rod Senft, and Trevor Johnstone – and is based in Vancouver, BC (www.tricorfounders.com).

Ernst & Young acted as the sell-side advisor to Keybrand. Tricor Founders was advised by Bryan & Company, Collins Barrow, and PricewaterhouseCoopers. Scotiabank and Roynat provided debt financing for the transaction.

© 2017 Private Equity Professional | June 14, 2017

J.F. Lehman Acquires NorthStar

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J.F. Lehman & Company (JFLCO) has acquired NorthStar Group Services in partnership with Medley Capital Corporation.

NorthStar is a provider of a number of services to the commercial and government end markets including facility demolition, facility abatement, soil and groundwater remediation, disaster recovery and clean-up services, and nuclear decommissioning services. NorthStar has more than 4,500 employees with a national operating presence across the United States. The company is headquartered in New York (www.northstar.com).

“JFLCO’s recapitalization of our company will enable NorthStar to fully pursue business opportunities which the management team has laid the foundation for over the past several years,” said CEO Scott State. “NorthStar will have the resources, capital structure and operational resources to support our long term priorities and growth plans – enabling a superior offering that will be well received by our customers and employees alike.”

“NorthStar has a sterling reputation in its core markets, providing high quality environmental and technical services across a wide array of end-markets throughout the United States,” said Alex Harman, Partner at JFLCO. “They have coupled this leading market position with several near-term growth opportunities that we are excited to partner with the senior management team to pursue.”

J.F. Lehman & Company was founded by Dr. John Lehman, who served six years as Secretary of the United States Navy. To date, J.F. Lehman has made investments in companies with an aggregate transaction value of approximately $1.6 billion. The firm was founded in 1992 and is headquartered in New York with an additional office in Washington, DC (www.jflpartners.com).

Medley Capital Corporation (NYSE: MCC) is an investor in privately-held middle market companies. The firm has offices in New York and San Francisco (www.medleycapitalcorp.com).

Debt financing for the transaction was arranged by M&T Bank. Houlihan Lokey was the financial advisor to NorthStar.

© 2017 Private Equity Professional | June 14, 2017