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