Archives for June 6, 2018

Seidler Equity Acquires Rawlings

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Seidler Equity has agreed to acquire Rawlings Sporting Goods Company from publicly traded Newell Brands for $395 million. Major League Baseball, which relies on Rawlings for its official game ball and other products, is co-investing alongside Seidler.

Rawlings manufactures and markets baseball, basketball, football, and softball sporting goods for professional athletes, national governing bodies, and sports leagues worldwide. The company’s products – sold under the Rawlings, Miken and Worth brands – include gloves, wood and alloy bats, helmets, protective products, baseballs, bags, batting gloves, pants, and outer wear. Rawlings’ 2017 net sales were approximately $330 million. The company was founded in 1887 and is based in St. Louis (www.rawlings.com).

Rawlings’ baseballs have been the official, and exclusive, game balls of Major League Baseball since 1977 and the company’s contract as MLB’s official ball and helmet supplier runs through 2021. “MLB is excited to take an ownership position in one of the most iconic brands in sports and further build on the Rawlings legacy,” said Chris Marinak, MLB’s Executive Vice President for Strategy, Technology & Innovation. “We are particularly interested in providing even more input and direction on the production of the Official Ball of Major League Baseball, one of the most important on-field products to the play of our great game.”

Rawlings was acquired by Newell through its April 2016 acquisition of Jarden Corp. and the sale of the business to Seidler Equity is part of Newell’s previously announced plans to divest some of its brands. “We are pleased with the agreement to sell Rawlings at an attractive multiple,” said Michael Polk, CEO of Newell Brands. “Rawlings is an iconic brand and Seidler Equity, in partnership with Major League Baseball, will identify new opportunities for this brand and for the company’s employees. This transaction is a pivotal step in our company’s transformation to become a more focused, forward-facing consumer goods company with tremendous opportunities.”

Seidler Equity was founded in 1992 by brothers Peter Seidler and Robert Seidler and has more than $2 billion in capital under management. The firm is headquartered in Marina del Rey, CA (www.sepfunds.com). Peter Seidler is the managing partner of the holding company that owns the San Diego Padres and he is also a member of Major League Baseball’s Ownership Committee and Investment Committee.

Newell Brands (NYSE: NWL) is a global consumer goods company with a portfolio of well-known brands including Paper Mate, Sharpie, Parker, Elmer’s, Coleman, Jostens, Oster, Sunbeam, and many others. The company is headquartered near New York in Hoboken, NJ (www.newellbrands.com).

Morgan Stanley was the financial advisor to Newell Brands and Bank of America Merrill Lynch advised Seidler Equity.

The sale of Rawlings is expected to close by the end of July.

© 2018 Private Equity Professional | June 6, 2018

Gladstone Exits Drew Foam

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Gladstone Investment Corporation has sold Drew Foam Companies to Branford Castle.

Drew Foam is a designer, molder and fabricator of expanded polystyrene foam products used in industrial, construction, cold chain pharmaceutical and food applications, and consumer markets. The company was founded in 1965 and is headquartered in Monticello, AR (www.drewfoam.com).

Drew Foam has three operating facilities, one each in Monticello, AR; Portland, TN; and Anderson, SC. The company processes more than 100 different orders per day, with an estimated 80% of its orders manufactured and shipped on company owned trucks within 24 hours of receipt and 95% shipped within 48 hours.  Drew Foam has more than 700 customers, with no single customer accounting for more than 5% of sales, and its customer retention rate is in excess of 97%.

“Drew’s logistical capabilities and ability to deliver low-volume custom products on a just-in-time basis are unique competitive advantages,” said John S. Castle, President and CEO, of Branford Castle. “We are looking forward to enhancing the company’s packaging-industry growth, extending its customer base, innovating new products and entering new regions.”

Branford Castle invests in companies that have enterprise values of up to $75 million and also have from $1.5 million to $15 million of EBITDA. Sectors of interest include industrials, consumer goods & services and transportation & logistics. Between its founding in 1986 to 2016, Branford Castle operated as a family office. The firm is led by John Castle and David Castle and is headquartered in New York (www.branfordcastle.com).

In October 2016, Branford Castle held a final close of its first fund that was open to outside investors and the buy of Drew Foam is the fifth transaction completed by that fund. In January 2018, Branford Castle acquired Vitrek, a manufacturer of electrical safety test and measurement equipment, based near San Diego in Poway, CA (www.vitrek.com); in February 2017, the firm acquired Surface Preparation Technologies, a provider of rumble strips and related roadway safety services, based in Mechanicsburg, PA (www.rumblestrips.com); in July 2016, it acquired Earthlite Massage Tables, a manufacturer of massage tables, spa and wellness equipment, based in Vista, CA (www.earthlite.com); and in September 2017 the firm completed an add-on acquisition for Earthlite with the buy of Continuum Footspas, a designer and manufacturer of pedicure chairs and pedicure equipment, based in New Berlin, WI (www.mycontinuumpedicure.com).

“Our fund is moving quickly to put capital to work.  We are delighted with the companies we have purchased and their performance to date,” said Laurence Lederer, a Managing Director of Branford Castle.  “We are especially excited to partner with Drew Foam’s CEO, Bill Givens, and the rest of his team on this transaction.”

Gladstone Investment, which acquired Drew Foam in August 2012, realized a significant gain on its equity investment in the company. “Gladstone Investment has thoroughly enjoyed our partnership with the Drew Foam management team during the life of our investment,” said Greg Bowie, a Director of Gladstone Investment. “The management team, led by Bill Givens, achieved outstanding results in both growing and transforming the business since our acquisition in 2012.”

“With the sale of Drew Foam and from inception in 2005, Gladstone Investment has exited 13 of its management supported buy-outs realizing significant net realized gains on these investments,” said David Dullum, President of Gladstone Investment. “These realized gains are a result of Gladstone Investment’s strategy and capability as a buyout fund and our investment approach of realizing gains on equity, while generating strong current income during the investment period.”

Gladstone Investment (NASDAQ: GAIN) is a publicly-traded business development company that makes debt and equity investments in US-based small to middle-market businesses. Target investments generally range from $5 million to $30 million in companies with $3 million to $20 million in EBITDA. Gladstone Investment is based in McLean, VA (www.gladstoneinvestment.com).

© 2018 Private Equity Professional | June 6, 2018

Carousel Acquires Huseby

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 Carousel Capital has acquired Huseby, a provider of legal services including court reporting, on site and virtual deposition services, audio file transcription services, and trial preparation services.

Huseby was founded by CEO Scott Huseby in 1989 (then Huseby & Associates) and is headquartered in Charlotte with additional offices in Atlanta, New York, San Francisco, Washington DC and Houston (www.huseby.com).

“From the first meeting we knew Carousel Capital was the right partner for us,” said Mr. Huseby. “Charles Grigg and his team not only bring the capital we need for growth, but also a breadth of experience helping companies like Huseby succeed.  And more important, it was clear to me from the beginning that Huseby, Inc. and Carousel Capital share common values.”

Carousel Capital invests in business, consumer and healthcare services companies that are headquartered in the Southeastern United States and have enterprise values of up to $150 million and EBITDA of at least $3 million. The firm, based in Charlotte, was founded in 1996 and is led by managing partners Charles Grigg and Jason Schmidly (www.carouselcapital.com).

Since founding, Huseby has completed 34 acquisitions and mergers of other court reporting firms. “We have been following Huseby’s progress over the past 4 or 5 years and are excited to participate in this next round of growth,” said Mr. Grigg. “Scott Huseby and his team have an impressive track record of acquiring court reporting agencies and creating value for all the stakeholders.”

Global Growth Partners, a Charlotte-based investment bank, was the financial advisor to Huseby.

© 2018 Private Equity Professional | June 6, 2018

Linden Invests in Solara Medical

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Linden Capital Partners has acquired Solara Medical Supplies, a direct-to-patient distributor of diabetes therapy products including continuous glucose monitors and insulin pumps.

Solara Medical was founded in 2002 by Tod Robinson and is headquartered in Chula Vista, CA with additional offices in Michigan, Texas, and Alabama (www.solaramedicalsupplies.com).

“We chose to partner with Linden due to their exclusive focus on healthcare investing, their subsector expertise in distribution, diabetes and DME, and their unique human capital resources,” said Mr. Robinson. Mr. Robinson will continue to work with Solara in an operational role, as a member of the board of directors, and as an investor.

With the transaction now closed, Ron Labrum, a Linden Operating Partner, has been named Chairman of Solara, and Keith Crawford, an advisor to Linden, has been named as the company’s new CEO. Mr. Crawford was previously the Senior Vice President of Operations and Chief Strategy Officer at Medical Specialties Distributors which was sold by New Mountain Capital to McKesson Corporation for $800 million on June 1, 2018. “Tod Robinson, and his team have built an extraordinary business. I look forward to working with Tod and carrying on the company’s strong employee culture and commitment to providing exceptional service to patients, manufacturers and payors,” said Mr. Crawford.

Linden Capital Partners is focused exclusively on leveraged buyouts in the healthcare and life science industries with a specific interest in medical products, specialty distribution, pharmaceutical, and services segments of healthcare. Linden’s strategy is based on three elements: healthcare and life science industry specialization; integrated financial and operating expertise; and strategic relationships with large corporations. In May 2018, Linden closed its fourth private equity fund, Linden Capital Partners IV LP, at the hard cap of $1.5 billion. Fund IV was oversubscribed and exceeded its target of $1.25 billion. The firm is based in Chicago (www.lindenllc.com).

Debt financing of $105 million was provided by Twin Brook Capital Partners, the sole lead arranger and administrative agent, Monroe Capital, and Solar Capital.

Covington Associates was the financial advisor to Solara. Kirkland & Ellis, King & Spalding, and Honigman Miller Schwartz & Cohn served as legal advisors to Linden.

© 2018 Private Equity Professional | June 6, 2018