SK Capital has agreed to acquire the performance products and solutions business (PPB) of PolyOne Corporation for approximately $775 million.
PPB is comprised of Geon Performance Materials, a maker of polyvinyl chloride (PVC) compounds; and Producer Services, a maker of a range of formulated polypropylene and thermoplastic polyolefin products, and a provider of contract manufacturing services. PPB has twelve manufacturing locations across North America and Asia and has approximately 1,100 employees. PPB has annual sales of approximately $700 million and its products are sold to companies that are active in the construction and automotive end markets.
Geon dates back to 1927 when BFGoodrich discovered and produced the first usable vinyl polymer. In 1948 the company created a vinyl plastic division based on this technology and later, in 1993, spun off the division through a public offering creating Geon.
“PPB is a market leader with a rich heritage in the PVC and polypropylene compounding industry,” said Jack Norris, a managing director of SK Capital. “We are excited about the opportunity to further strengthen the business through both growth and improvement initiatives, similar to how we’ve approached several other investments that were corporate carveouts.”
SK Capital invests in the specialty materials, chemicals and pharmaceuticals sectors and typically invests equity of $100 million to $200 million in each portfolio company. In February 2019 the firm held a final closing of SK Capital Partners Fund V LP with total committed capital of $2.1 billion. The firm’s earlier fund was raised in 2014 with $1.0 billion of capital. SK Capital is headquartered in New York (www.skcapitalpartners.com).
PolyOne Corporation (NYSE: POLY) is a provider of materials and services including specialty polymer formulations, color and additive systems, polymer distribution and specialty vinyl resins. The company had revenues in 2018 of $3.5 billion and has 60 manufacturing sites and 9 distribution facilities in North America, Europe, Asia and South America. PolyOne, headquartered near Cleveland in Avon Lake, OH, was formed in 2000 from the merger of M.A. Hanna Company and The Geon Company (www.polyone.com).
“We conducted what became a very competitive bidding process for our PPB segment,” said Robert Patterson, the chairman, president and CEO of PolyOne. “Ultimately, we determined that divesting the business to SK Capital Partners would provide greater flexibility to accelerate our specialty growth strategy and is in the best interest of customers, employees and shareholders.”
Committed debt financing for this acquisition is being provided by Cerberus Business Finance.
HSBC was the financial advisor to PolyOne on this transaction which is expected to close in the fourth quarter of 2019.
© 2019 Private Equity Professional | August 19, 2019
Centerbridge Partners has acquired GoHealth, a provider of direct-to-consumer sales, marketing and customer service products used by health insurance providers.
“In the two decades since its founding, GoHealth has been committed to making health insurance accessible, affordable, and personalized for individuals across the country,” said Mr. Jones. “Centerbridge’s significant investment, and extensive expertise in the healthcare and financial services sectors, will position GoHealth to improve its balance sheet, further invest in technology and innovation, and deepen market penetration for the benefit of our customers and the consumers they serve.”
“GoHealth is a highly differentiated industry-leader operating in rapidly expanding markets with a demonstrated track record of successfully entering new market segments and driving consistent growth,” said Jeremy Gelber, a senior managing director at Centerbridge. “In bridging the gap between consumers and insurance carriers, the company provides an innovative and highly scalable service to its broad network of healthcare relationships.”
Centerbridge invests from $50 million to $300 million in US-based leveraged buyouts and distressed securities. Sectors of interest include consumer, financial services, healthcare, industrials, real estate, and technology, media & telecom. The firm has $28 billion of capital under management and is headquartered in New York with an additional office in London (
Mill Point Capital has completed the carve-out of the power transformers division of publicly traded Pioneer Power Solutions for $68 million comprised of $60.5 million in cash and $7.5 million in seller’s notes.
Mill Point makes control-oriented investments of $15 million to $80 million in middle-market companies that have enterprise values of $50 million to $250 million. Sectors of interest include business services and industrial. Mill Point Capital closed its inaugural institutional fund, Mill Point Capital Partners LP, at its hard cap of $450 million in May 2018. The firm was founded by Managing Partner Michael Duran and is based in New York (
Pioneer Power Solutions (NASDAQ: PPSI) manufactures and services a range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets. The company is headquartered in Fort Lee, NJ (
The protracted strong market for business sellers continues to be a party that shows no sign of winding down, according to GF Data’s report on private equity deal activity in the second quarter.
“While there is some fluctuation from quarter to quarter,” said GF Data’s CEO Andrew Greenberg, “valuations have remained stable on a fairly elevated plateau. When we look at rolling two-quarter averages, the overall pricing multiple has hovered between 7.1x and 7.5x over the past six quarters. Two caveats should apply. Valuations continue to be more robust on larger transactions and in some business categories, and the second quarter data obviously doesn’t reflect more recent market gyrations. By next quarter, we’ll see whether the bond market’s rate inversion was hiccup or harbinger.”
According to the firm’s report, the accommodating debt market appears to be playing an indispensable role in prolonging current conditions. “Debt utilization has enabled financial buyers to get some relief in capital structure, even as they maintain deal pricing,” said B. Graeme Frazier, IV, GF Data’s co-founder and principal. “The rolling two-quarter data shows average equity contribution receding to 47% after peaking at 54% in the second half of 2018.”
Tim Clifford, the president and CEO of Abacus Finance, an active lender to the lower middle-market, provided this comment on the overall environment for deal activity. “The lower middle-market will be somewhat protected, but not immune to weaker deal activity during softer economic times — across all economic cycles entrepreneurs experience life events that lead to transactions. As market volatility rises resulting from concerns of rates, tariffs, and a looming recession, the importance of flexibility in the capital structure becomes paramount in helping support these businesses during a downturn.”
