Archives for December 20, 2018

Greif to Acquire H.I.G.’s Caraustar

by

Publicly-traded Greif has agreed to acquire Caraustar Industries, a portfolio company of H.I.G. Capital, for $1.8 billion in cash.

Caraustar is one of North America’s largest integrated manufacturers and converters of 100% recycled paperboard and converted paperboard products. Caraustar serves end-use markets in tube and core, folding carton, gypsum facing paper and specialty paperboard products.

Caraustar has more than 80 operating facilities throughout the United States. The company, led by CEO Mike Patton, was founded in 1938 and is based in Austell, GA (www.caraustar.com).

For the last twelve months ended September 30, 2018 Caraustar had sales of $1.4 billion and an EBITDA of $174 million. With a purchase price of $1.8 billion this equates to a TTM EBITDA valuation multiple of 10.3x. Greif has provided an Adjusted EBITDA (adjusted for current market conditions as of September 30, 2018) of $220 million which results in an Adjusted TTM EBITDA valuation multiple of 8.2x. Grief has also identified approximately $45 million of annual run-rate cost synergies that could be achieved within three years that would further increase the Adjusted TTM EBITDA to a proforma amount of $265 million.

“Caraustar offers an exceptional strategic and cultural fit for Greif,” said Greif’s President and Chief Executive Officer, Pete Watson. “Its complementary paper packaging and recycled fiber operations will drive significant free cash flow growth, improve balance and profitability within the Greif portfolio and increase Greif’s exposure to U.S. industrial and consumer end markets.”

Greif (NYSE: GEF) is a provider of industrial packaging products and services. The company produces steel, plastic and fiber drums, intermediate bulk containers, reconditioned containers, flexible products, containerboard and packaging accessories and provides filling, packaging and other services for a wide range of industries.

Greif has annual revenues of approximately $3.8 billion and operates from 200 facilities in more than 40 countries. Greif is headquartered north of Columbus in Delaware, OH (www.greif.com).

H.I.G. acquired Caraustar in May 2013 from Wayzata Investment Partners which had acquired the company in 2009 through a pre-packaged chapter 11 process. H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing and service businesses. H.I.G. has more than $25 billion of capital under management. The firm is based in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, London, Hamburg, Madrid, Milan, Paris, Bogotá, Mexico City and Rio de Janeiro (www.higcapital.com).

Rothschild & Co and Credit Suisse were the financial advisors to Caraustar on this transaction and Goldman Sachs & Co. advised Greif.

Wells Fargo Bank, Goldman Sachs Bank USA and JP Morgan Chase Bank have provided financing commitments for this transaction which is expected to close during the first quarter of 2019.

© 2018 Private Equity Professional | December 20, 2018

Warren Acquires StormTrap

by

Warren Equity Partners has acquired StormTrap, a provider of stormwater management products to the municipal, commercial, industrial, and residential markets.

StormTrap designs and engineers precast concrete systems that store stormwater runoff in underground chambers before releasing it at a controlled rate or harvesting it for reuse. In addition, the company also provides water quality systems that remove pollutants and contaminants from stormwater runoff. StormTrap, led by President Bob McCormack, is headquartered near Chicago in Romeoville, IL (www.stormtrap.com).

Warren Equity acquired a majority interest in StormTrap from the Hawken family, who founded the company in 2002. The Hawken family invested alongside Warren Equity in the transaction and will remain on the board of directors going forward.

“We chose Warren Equity due to their prior experience investing in companies targeting similar end markets, as well as the strong cultural fit with the StormTrap team,” said Mr. McCormack. “With Warren Equity, we have found a partner who will help support our growth strategy and provide valuable guidance during our next chapter of growth.”

“StormTrap is a great fit for Warren Equity given our focus on the infrastructure market and the company’s focus on providing solutions to remedy overburdened stormwater systems,” said Scott Bruckmann, a partner at Warren Equity. “StormTrap is well positioned to continue to serve the growing demand for stormwater management systems, and we are excited to help the company expand their geographic footprint and product offering. We look forward to partnering with the Hawken family and StormTrap’s exceptional management team.”

Warren Equity invests from $5 million to $40 million in North American-based companies that have from $3 million to $15 million of EBITDA. Sectors of interest include industrial, infrastructure, and business services. The firm is based in Jacksonville Beach, FL (www.warrenequity.com).

“Over its 16-year history, StormTrap has grown into a market leader for underground concrete stormwater systems through continuous development of new technologies and products,” said Jamie Hawken, board member of StormTrap, “We are looking forward to working with Warren Equity to grow the company in North America and internationally.”

William Blair & Company (www.williamblair.com) was the financial advisor to StormTrap on this transaction.

© 2018 Private Equity Professional | December 20, 2018

Incline Buys Charter Industries

by

Incline Equity Partners has acquired Charter Industries, a supplier of PVC and veneer edgebanding, plastic and metal laminates, sheet veneer, and T-molding products used by specialty carpenters and furniture installers.

Charter’s edgebanding products are produced in a variety of colors, sizes and patterns and are sold as finishing products for use in a range of applications by furniture and case good manufacturers operating in the education, healthcare, retail, hospitality, commercial, recreational vehicle and residential markets. Some of the company’s product applications include dormitory furniture, medical facility casework, point-of-sale kiosks, store fixtures, and school lockers.

Charter, led by its founder and CEO Pete Eardley, is headquartered in Grand Rapids, MI and has four additional locations in Albany, NY; Jacksonville, FL; Fresno, CA; and Dallas, TX (www.charterindustries.com).

“We are excited to have partnered with Pete Eardley and the entire management team at Charter,” said John Morley, a managing director with Incline. “The company’s clients rely upon Charter’s industry-best lead times, incredible breadth and depth of inventory, same-day shipping capabilities and overall dedication to customer service, and we’re delighted to be a part of such an organization.”

Incline Equity Partners invests from $15 million to $30 million in support of recapitalizations, buyouts and corporate divestitures of lower middle market companies that have EBITDAs greater than $5 million and enterprise values between $25 million and $300 million. Sectors of interest include value-added distribution, specialized light manufacturing, and business services.  Incline was formed in 2011 and is based in Pittsburgh (www.inclineequity.com).

Quarton International (www.quartoninternational.com) was the financial advisor to Charter Industries on this transaction.

© 2018 Private Equity Professional | December 20, 2018

Gryphon Adds to HEPACO

by

HEPACO, a portfolio company of Gryphon Investors since August 2016, has acquired Environmental Management Specialists, a provider of emergency response, remediation, and environmental services.

Cleveland-based Environmental Management Specialists (EMS) has 185 employees and operates across 11 locations in Ohio, Indiana, Pennsylvania, and Kentucky. The company’s services include emergency response, vacuum truck services, industrial cleaning, confined space entry services, waste transportation, site remediation, facility decontamination, equipment decommissioning, and lab packing (www.emsonsite.com).

EMS is led by its founder and CEO Jon Ransom who will join the HEPACO executive team after the closing of the transaction and he will maintain a significant equity stake in the combined company

HEPACO is a provider of emergency response, environmental remediation, maritime services, wastewater treatment, and other industrial services across a range of end markets including rail, oil & gas, transportation, power & utility, and manufacturing. The company provides services on both an emergency response and planned basis and in 2017 completed more than 6,500 projects. HEPACO has 31 locations across more than 20 states in the Mid-Atlantic and Southeastern United States and offers a three-hour or less response time within this geographic footprint. The company, led by CEO Ken Smith, was founded in 1984 and is headquartered in Charlotte (www.hepaco.com).

The combination of HEPACO and EMS creates a company with more than 685 employees and a footprint of over 40 locations across the Southeast, Mid-Atlantic, Midwest, and Northeast regions in addition to the ability to respond to emergencies on a national basis through its managed network of third-party emergency response vendors.

“We are very excited to have completed the highly strategic acquisition of EMS and to partner with Jon Ransom and his team,” said HEPACO Chairman and Gryphon Operating Partner Phil Petrocelli. “EMS’ complementary geographic footprint and strong performance represent an attractive path for HEPACO’s continued growth.”

The buy of EMS follows HEPACO’s October 2018 acquisition of Trans Environmental, a provider of environmental and emergency response services headquartered near Rockford in Loves Park, IL (www.transenvironmental.com).

Gryphon makes leveraged acquisitions and growth investments in middle-market companies. The firm invests from $50 million to $200 million of capital in companies with sales ranging from $100 million to $500 million. Sectors of interest include business services, consumer and retail, automotive, chemical, general manufacturing, healthcare and hotels.

Gryphon closed its fourth private equity buyout fund, Gryphon IV LP, in November 2016 at $1.1 billion, and raised a $100 million captive mezzanine fund, Gryphon Mezzanine Partners LP, in August 2017. Gryphon Investors is based in San Francisco (www.gryphoninvestors.com).

EdgePoint Capital Partners (www.edgepoint.com) was the financial advisor to EMS on this transaction.

© 2018 Private Equity Professional | December 20, 2018