Archives for February 12, 2019

Mason Wells Sells Eddy to Insight

by

Mason Wells has sold Eddy Foods (DBA Eddy Packing), a processor of smoked, cooked and fresh pork, beef and poultry products, to Insight Equity. Mason Wells acquired Eddy Packing in January 2012 through its $525 million third fund.

Eddy Packing’s branded and private label products include barbeque meats (beef, pork, chicken and turkey), marinated meats (smoked and fresh), beef brisket (whole, sliced, and chopped), beef ribs and cutlets, pulled pork and chicken, smoked and fresh sausages, fajitas, and kolaches (stuffed pastries). The company’s products are sold to foodservice, contract packing and retail customers. Eddy Packing was founded in 1953 and is headquartered east of San Antonio in Yoakum, TX (www.eddypacking.com).

“The partnership of Eddy Packing and Mason Wells over the past several years has poised the company for future success in the food industry,” said John Fortino Jr., president and CFO of Eddy. “The investments that Mason Wells and Eddy Packing made in processing and packaging capabilities as well as in key personnel will foster sustainable growth as a leading high-quality food processor in the ready-to-eat category.”

“We are pleased to report the sale of Eddy,” said Greg Myers, senior managing director of Mason Wells.  “During our ownership, we transitioned the company from family ownership and made investments to enhance the company’s operational capabilities, expand its product breadth, and increase customer and channel diversification.”

The existing management team of Eddy Packing is investing in this transaction alongside Insight Equity. At closing, Jim Reed, an executive with more than 26 years of experience in the food and protein processing industries, joined the company as its new chief executive officer. “Insight Equity is excited to partner with an experienced operating team to pursue continued growth at Eddy. The combination of Jim Reed and John Fortino will support the company’s goals of developing best in class facilities while also expanding into new markets,” said Eliot Kerlin, a senior partner at Insight Equity.

“Eddy’s broad product offering and deep experience with various processing techniques provides a strong foundation for continued growth,” said Luke Bateman, a senior vice president at Insight Equity. “Additionally, the company’s extensive product development capabilities provide customers in multiple sales channels with a comprehensive option for fulfilling their protein needs.”

Insight Equity makes control investments in middle market, asset-intensive companies across a range of industries and specializes in partnering with companies in complex and challenging situations, including corporate divestitures, aggressive growth opportunities, restructurings, and transitions from private family ownership.  The firm is based near Dallas in Southlake, TX and also has an office in New York (www.insightequity.com).

Mason Wells makes investments in Midwest-based companies with revenues of $25 million to $300 million and EBITDAs of $5 million to $30 million. Sectors of interest include consumer packaged goods; packaging materials and converting; outsourced business services; and engineered products and services.  In February 2016, Mason Wells held a final closing of Mason Wells Buyout Fund IV and its related Executive Buyout Fund IV with total commitments of $615 million.  The firm was founded in 1998 and is based in Milwaukee (www.masonwells.com).

Robert W. Baird (www.rwbaird.com) was the financial advisor to Eddy Packing.

© 2019 Private Equity Professional | February 12, 2019

Bertram Acquires Fabric Maker

by

Bertram Capital has acquired Perennials and Sutherland from Acacia Partners which first invested in the company in December 2015.

Perennials and Sutherland is a designer and manufacturer of acrylic fabrics and rugs for indoor and outdoor use (such as gardens, pools, yachts and casual living areas), and high-end outdoor furniture. The company’s UV stable fabrics and rugs are designed to be resistant to stains, water, mold and mildew and are sold to a range of residential and commercial customers.The company’s furniture products are sold primarily through high-end showrooms targeting interior designers. Perennials and Sutherland has production facilities in Mexico and India and is headquartered in Dallas (www.perennialsandsutherland.com).

“Over the past two decades, Perennials and Sutherland has established itself as a clear leader in a high-growth and attractive market,” said Tim Heston, a partner at Bertram Capital. “The company’s compelling growth and market position reflect its superior product offering, differentiated design and manufacturing capabilities, as well as its entrenched relationships within the trade and retail channels.”

The buy of Perennials and Sutherland is Bertram’s eighth platform acquisition for its third fund which closed in February 2018 with $500 million of capital commitments.

“As a market leader in a niche sector that continues to benefit from favorable secular tailwinds, Perennials and Sutherland, in partnership with Bertram Capital, is well-positioned to enter its next phase of growth.  Bertram is excited to partner with the Sutherlands to take Perennials and Sutherland to the next level of growth and market presence,” said Jeff Drazan, a managing partner of Bertram Capital. “I am also pleased that Perennials and Sutherland co-founders, Ann and David Sutherland, will remain actively involved in operations and retain significant ownership in the company.”

“The Bertram team differentiated itself in the sale process through its clear understanding of our brand, our products and the favorable adoption trends in our market,” said Ms. Sutherland. “We are truly excited to partner with Bertram to help us pursue our next phase of growth, further solidify our leading market position and strengthen our operations.”

Bertram invests in middle-market business services, consumer, industrial and manufacturing companies that have revenues from $25 million to $250 million and EBITDA of $5 million to $30 million. The firm is headquartered south of San Francisco in San Mateo, CA (www.bertramcapital.com).

Acacia Partners, the seller of Perennials and Sutherland, invests from $20 million to $100 million of equity in family-owned and/or owner-operated companies that have EBITDA of more than $5 million. Sectors of interest include IT and business services, consumer products and services, health care services, distribution, transportation and logistics, packaging, and manufacturing. Acacia Partners is headquartered in Austin, TX (www.acaciapartnersllc.com).

Twin Brook Capital Partners provided financing to support Bertram’s buy of Perennials and Sutherland. Chicago-based Twin Brook is the middle market direct lending arm of Angelo Gordon. The firm targets senior financing opportunities up to $400 million with hold sizes across the Twin Brook platform ranging from $25 million up to $150 million. The firm provides financing to support sponsor-led buyouts and recapitalizations of companies with $3 million to $50 million in EBITDA, with an emphasis on companies with $25 million of EBITDA and below.

© 2019 Private Equity Professional | February 12, 2019

CenterGate Acquires Mid-State

by

CenterGate Capital has acquired Mid-State Industrial Maintenance, a provider of on-site and off-site industrial maintenance and repair services.

Mid-State provides its industrial services to customers in the chemical processing, phosphate mining, power generation, and building products industries throughout the southeastern United States. The company currently employs more than 500 engineers and shop personnel that are active in manufacturing, repairing, designing, dissembling and transporting equipment and machinery ranging from gearboxes and trommels to structural piping and storage tanks.

Mid-State, led by CEO Jeff Clyne, was founded in 1973 and is headquartered in Lakeland, FL (www.midstateindustrialcorp.com).

“We are excited about our partnership with CenterGate and what it means for our employees and customers,” said Mr. Clyne. “CenterGate’s investment will provide us the capital and strategic resources to continue to grow our capability set and geographic reach.”

“The management team of Mid-State has an impressive track record of success, and we look forward to working with the team to continue that growth,” said Tim Liu, a managing director at CenterGate. “The company has a reputation for the highest levels of safety, service, and quality, which uniquely positions the company to be successful.”

CenterGate Capital invests in lower middle market companies that have from $20 million to $250 million of revenue and up to $20 million of EBITDA. Sectors of interest include business services, industrials, energy services, consumer, and healthcare. In December 2016, the firm held an above target and oversubscribed final closing of CenterGate Capital Partners I LP with $350 million of capital commitments. CenterGate is headquartered in Austin, TX (www.centergatecapital.com).

© 2019 Private Equity Professional | February 12, 2019

H.I.G. Closes Sale of Caraustar to Greif

by

H.I.G. Capital has completed the sale of Caraustar Industries to publicly-traded Greif for $1.8 billion.

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).

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. During H.I.G.’s ownership term Caraustar’s revenue and profitability more than doubled through both organic growth and add-on acquisitions.

“H.I.G. has been thoughtful and supportive of Caraustar since we partnered together in 2013. In addition to supporting Caraustar’s aggressive M&A strategy, H.I.G. has provided us the freedom and flexibility needed to grow the business organically and served as a value-added thought partner to our senior leadership team,” said Mr. Patton.

“As a leader in the recycled paperboard and packaging solutions market, Caraustar’s ability to deliver a broad product portfolio to a national customer base via a low cost, vertically integrated manufacturing network provides a value proposition unmatched in the industry,” said Tenno Tsai, a managing director of H.I.G. “Caraustar is a terrific organization with exceptional leadership, and it has been a pleasure supporting Mike Patton and his team to transform the business – more than doubling Caraustar’s size over our hold period. As a result, Caraustar has delivered an outstanding return for H.I.G. and its investors.”

For the 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.

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. The company is headquartered north of Columbus in Delaware, OH (www.greif.com).

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 $30 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).

© 2019 Private Equity Professional | February 12, 2019