Archives for July 24, 2020

Humvee Maker Sold to KPS

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KPS Capital Partners has agreed to acquire AM General, a military vehicle and contract automotive manufacturer, from MacAndrews & Forbes, an investment firm controlled by Ronald Perelman.

AM General manufactures specialized vehicles for military and commercial customers including the iconic High Mobility Multipurpose Wheeled Vehicle (HUMVEE). The company’s military products include light tactical vehicles and troop carriers. AM General also operates two wholly-owned subsidiaries, General Engine Products, a diesel engine manufacturer, and General Transmission Products, an automatic transmission manufacturer.

AM General, led by CEO Andy Hove, is headquartered in South Bend, Indiana with manufacturing facilities located in Indiana and Ohio, and a technical engineering center in Michigan.

“KPS, with a decades-long track record of building world-class, industry-leading companies, is the ideal partner for AM General and the military and commercial customers we serve,” said Mr. Hove. “We look forward to working with KPS to continue to execute our strategy and invest in our ambitious growth plan. KPS’ demonstrated commitment to manufacturing excellence, continuous improvement and commitment to invest in technology and innovation will only enhance the company’s ability to compete in today’s military and commercial marketplace.”

AM General traces its roots to the Standard Wheel Company which was founded in 1903 in Terre Haute, Indiana. In 1908, John Willys purchased the business and renamed it Willys-Overland Motors. During the 1940’s, Willys-Overland developed a four-wheel drive tactical utility truck for the US Army – the “Jeep” of World War II fame.

In 1953, Kaiser Motors purchased Willys-Overland, changing its name to Kaiser-Jeep Corporation in 1963. American Motors purchased the company in 1970 and operated the business through its General Products Division and in 1971 spun out the division as AM General Corporation, a wholly-owned subsidiary that produced military trucks and non-commercial vehicles. LTV acquired AM General in 1983 and sold it to Renco Group (a holding company controlled by Ira Rennert) in 1992. In 2004, Ronald Perelman’s MacAndrews & Forbes acquired the company from Renco.

“We are excited to acquire AM General, a legendary American company and world leader in the design, engineering, manufacturing and support of light tactical and specialty vehicles,” said Jay Bernstein, a partner of KPS. “We look forward to working with CEO Andy Hove, the company’s management team, and all of AM General’s employees to build on this great platform, organically and through acquisition.”

Since its founding more than 100 years ago, AM General has built and maintained over one million vehicles and more than 300,000 automotive systems. Today, AM General builds more military light tactical vehicles than any other company in the world.

“We intend to leverage the company’s commitment to research, technology, innovation and new product development, as well as its heritage and iconic brand name,” added Mr. Bernstein. “KPS’ demonstrated track record and history of successfully investing in specialty vehicle businesses – as well as its global platform and significant financial resources – make us exceedingly confident that AM General will continue to thrive under KPS’ ownership for the benefit of its customers and all stakeholders.”

KPS Capital Partners makes control investments in manufacturing and industrial companies across a range of industries, including basic materials, branded consumer, healthcare, automotive parts, capital equipment, and general manufacturing. Many of KPS’s investments involve creating new companies to buy underperforming or distressed assets, companies operating in bankruptcy or in default of obligations to creditors, or with a history of recurring operating losses.  KPS is headquartered in New York City with additional offices in Frankfurt and Amsterdam.

In October 2019, after just four weeks of fundraising, KPS held a first, final, hard cap and oversubscribed closing of KPS Special Situations Fund V LP and KPS Mid-Cap Fund LP. KPS Fund V had a $5 billion target and a $6 billion hard cap, and KPS Mid-Cap had a $750 million target and a $1 billion hard cap. In June 2020, KPS acquired the Lufkin rod lift business from publicly traded Baker Hughes. Lufkin’s rod lift products, technologies, and services are used in the energy sector to pump oil and gas to the surface using artificial pressure.

MacAndrews & Forbes, the seller of AM General, is a New York City-based holding company controlled by billionaire investor Ronald Perelman. The firm has a portfolio of companies across a range of industries from cosmetics and entertainment to biotechnology and military equipment.

Closing of the buy of AM General by KPS is expected in the third or fourth quarter of 2020.

Private Equity Professional | July 24, 2020

Trive Invests in Rubicon Bakers

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Trive Capital has made an investment in Rubicon Bakers, a maker of all-natural cakes, cupcakes, cookies, and muffins.

Rubicon’s product line includes more than 50 SKUs – including vegan and plant-based options – that are sold at more than 2,500 retail locations nationwide.

Rubicon is headquartered near San Francisco in Richmond, California. The company’s slogan is “Bake a Better World” and it actively trains, employs and supports people who have faced structural barriers to employment such as homelessness, incarceration, or substance abuse. Rubicon, a certified B Corporation, was founded in 1993 and acquired by Leslie Crary and Andrew Stoloff in 2009.

B Corporation certification is conferred by B Lab, a nonprofit organization with offices in the United States, Europe, Canada, Australia, and New Zealand. Company’s receiving the certification must have and maintain a minimum score from an online assessment of “social and environmental performance”, incorporate B Corp stakeholder commitments into governing documents, and pay an annual fee ranging from $500 to $50,000 depending on annual sales. Companies must re-certify every three years to retain B Corporation status. As of April 2020, there was just over 3,300 certified B Corporations operating in 150 industries in 71 countries.

“Rubicon was built on a culture of integrity, innovation, and caring that governs not only how we develop our products, but also how we relate to our customers and employees,” said Mr. Stoloff. “We believe we have found like-minded partners in Trive, and we look forward to building on our momentum with an operationally focused firm that can help us thoughtfully scale our production and efficiency to meet the increasing consumer demand for high-quality, honest, and delicious baked goods.”

“We are firm believers in the product and mission of the company, and we are excited to invest alongside management to support the continuing growth of Rubicon,” said Chris Zugaro, a partner at Trive Capital. “Rubicon has shown to be a true value-added supplier to its grocery partners due to its focus on innovating with exciting new flavors, vegan offerings, and product lines that create a fresh and engaging experience for the retailers’ customer. Trive looks forward to providing capital and resources to further enable Rubicon to pursue its mission and meet growing customer demand.”

Trive invests from $10 million to $150 million of debt or equity in North America-headquartered companies with revenues of $40 million to $1.5 billion. The firm is industry-agnostic but has specific experience across a range of sectors including aerospace and defense, automotive, building products, business services, chemicals, and consumer goods.

Last month, Trive agreed to acquire publicly traded Seven Aces, a coin-operated amusement machine route operator. The Norcross, Georgia-based company is the largest route operator of gaming machines in the state of Georgia.

In September 2017, Trive held a final closing of Trive Capital Fund III LP with $1 billion of capital commitments. The firm was founded in 2012 by Conner Searcy and Chris Zugaro and is based in Dallas.

Private Equity Professional | July 24, 2020

KPS Stalking Horse for Briggs & Stratton

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KPS Capital Partners has agreed to acquire the assets of small engine manufacturer Briggs & Stratton, including the equity of foreign subsidiaries, for approximately $550 million.

On July 20, Briggs & Stratton voluntarily filed for Chapter 11 bankruptcy protection to allow the company and its creditors to work out a reorganization plan, and the company has asked the bankruptcy court to designate KPS as its stalking horse bidder.

Briggs & Stratton (NYSE: BGGSQ) is the world’s largest producer of gasoline engines for outdoor power equipment used for power generation, pressure washing, lawn and garden, and turf care. Company owned brands include Briggs & Stratton, Simplicity, Snapper, Ferris, Vanguard, Allmand, Billy Goat, Murray, Branco and Victa.

For the trailing twelve months, Briggs & Stratton had revenues of $1.7 billion, gross profit of $242 million (14% GPM), and a negative EBITDA of $68 million. For the fiscal year ending June 30, 2017, the company had revenues of $1.8 billion, gross profit of $383 (GPM 21%), and EBITDA of $156 million (8.7% EBITDA margin).

Briggs & Stratton was founded in Milwaukee in 1908 and at one point was the world’s largest manufacturer of small gasoline engines. Over the past 112 years, it has produced more than 125 million engines.

“We are very excited to acquire Briggs & Stratton, a legendary brand in American manufacturing and the leading company in its industry,” said Michael Psaros, a co-founder and co-managing partner of KPS. “Briggs & Stratton enjoys a leading market position, scale, a global manufacturing footprint, world-class design and engineering capabilities, and a portfolio of industry-leading products sold under iconic brand names. Under KPS ownership, the new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor’s significant liabilities.  KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions.”

As part of this transaction, KPS has entered into an agreement in principle with the United Steelworkers of America under a new collective bargaining agreement (CBA) for Briggs & Stratton’s hourly employees at its manufacturing facilities in Wisconsin. The new CBA will become effective upon completion of the acquisition. Briggs & Stratton has about 5,200 worldwide employees with 1,300 in Wisconsin.

A syndicate of banks including Wells Fargo, Bank of America, BMO Harris Bank and PNC Business Credit has committed to provide financing to Briggs & Stratton.

KPS Capital Partners makes control investments in manufacturing and industrial companies across a range of industries, including basic materials, branded consumer, healthcare, automotive parts, capital equipment, and general manufacturing. Many of KPS’s investments involve creating new companies to buy underperforming or distressed assets, companies operating in bankruptcy or in default of obligations to creditors, or with a history of recurring operating losses.

Kirkland & Ellis is acting as legal counsel to KPS on this transaction.

Private Equity Professional | July 24, 2020

J.F. Lehman Hits Hard Cap

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J.F. Lehman & Company has held a final closing of its fifth fund with $1.35 billion of capital. Initially targeting $1.0 billion, JFL Equity Investors V LP, was oversubscribed and closed at its hard cap.

Limited partners in the new fund include both new and existing investors such as public and private pensions, insurance companies, financial institutions, endowments, foundations, family offices and high-net-worth individuals from across the US and Europe.

“We greatly appreciate the strong support for both our organization and established investment strategy,” said Louis Mintz, a partner at J.F. Lehman. “We are thankful that market participants recognized and valued the experience and cohesiveness of our team, the strength of our reputation and performance built over three decades of exclusive sector focus and our demonstrated investment discipline.”

J.F. Lehman is a middle-market private equity firm focused primarily on the aerospace, defense, maritime, government and environmental industries. Companies of interest have EBITDA of $10 million to $50 million and are headquartered in North America or the United Kingdom.

Last March, J.F. Lehman acquired Global Marine Group, a provider of marine engineering services including subsea cable maintenance and installation. The company owns and operates a fleet of specialized marine equipment, including three cable installation and repair vessels, four cable maintenance vessels, and 19 crew transfer vessels.

J.F. Lehman is headquartered in New York with an additional office in Washington DC. The firm was founded in 1992 by Dr. John Lehman, who served six years as Secretary of the United States Navy.

J.F. Lehman engaged Credit Suisse Securities as its placement agent for this fundraise and Jones Day provided legal services.

Private Equity Professional | July 24, 2020