Audax Sells Preferred Compounding

Audax Private Equity has sold Preferred Compounding Corporation to HEXPOL for $232 million. Audax acquired Preferred Compounding from Wingate Partners in January 2016.

Preferred Compounding supplies proprietary and custom mixed rubber compounds, including strips, slabs, pellets, and calendered sheets, used by molders, extruders, and mixers that are active in the automotive, general industrial, and infrastructure sectors. The company also provides compound development, improvement and testing services including support after product delivery.

Preferred Compounding has 540 employees in six facilities in Ohio (2), Tennessee, Georgia, Wisconsin and Mexico. The company is led by CEO Ken Bloom and is headquartered near Akron in Copley, OH (www.preferredperforms.com).

Under Audax ownership, Preferred Compounding completed three add-on acquisitions and significantly increased sales volume. The company had revenues in 2018 of $240 million. “Audax has been a valuable partner in helping us build and transform Preferred through organic growth and three strategic add-on acquisitions,” said Mr. Bloom. “The team looks forward to the next stage of growth with HEXPOL.”

The three add-on acquisitions were Akron, OH-based Valley Rubber Mixing, a custom rubber compounder with mixing and calendering capabilities, in January 2019; Wadsworth, OH-based Kleen Polymers, a custom rubber compounder specializing in non-black elastomeric compounds, in September 2017; and Lake Geneva, WI-based Trostel, a custom rubber compounder, in November 2016.

“We are proud to have partnered with Ken Bloom and the Preferred team to help create a market leader in the custom rubber compounding space,” said Jay Mitchell, a managing director at Audax. “The company has grown to become a leader in engineered and premium compounds that allow customers to meet highly demanding applications. We are thankful to Ken and the team for their efforts in growing the business significantly over the past three years.”

Audax invests in middle market companies that have from $8 million to $50 million in EBITDA and enterprise values of $50 million to $400 million. Sectors of interest include business and consumer services; energy; healthcare; technology, media and telecom; and industrials including chemicals, infrastructure and building materials. Audax has offices in Boston, New York and San Francisco (www.audaxgroup.com).

HEXPOL, the buyer of Preferred Compounding, is a publicly traded compounder of polymers serving the automotive, engineering, construction, transportation, energy, consumer, cable and wire, and medical equipment industries. The company had revenues of approximately $1.5 billion in 2018 and 4,600 employees in fourteen countries. HEXPOL is headquartered in Malmö, Sweden (www.hexpol.com).

“Preferred Compounding has a legacy of technical excellence with a product suite of over 7,500 compounds designed for the most critical applications. Further, approximately 70% of the compounds are derived from proprietary or enhanced co-developments serviced by highly strategic relationships,” said Tracy Garrison, the president of HEXPOL Compounding Americas.

William Blair & Company was the financial advisor to Preferred Compounding.

© 2019 Private Equity Professional | July 24, 2019

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