Archives for 2020

Brynwood Back in Private Label Pizza Biz

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Brynwood Partners has formed Great Kitchens Food Company to acquire the North American take-and-bake pizza business of ARYZTA.

Great Kitchens is a private label maker of take-and-bake pizza and flatbreads that are sold to grocery, club, and mass retailers, as well as into foodservice outlets nationally.

Great Kitchens, with total employment of about 700, operates a 155,000 sq. ft. pizza topping plant near Chicago in Romeoville, Illinois (headquarters) and a 165,000 sq. ft. pizza crust manufacturing facility in Chicago Heights, Illinois.

Brynwood has hired Admir Basic as the company’s new president and chief commercial officer, and Bill Steckel as chief financial officer. Mr. Basic has been with ARYZTA since 2011 most recently as its senior vice president of retail. Earlier, he held several senior positions at Solo Cup, including sales planning and strategy manager and supervisor of pricing analytics. Mr. Steckel was most recently the CFO of Angelica Corporation, a portfolio company of KKR and a provider of healthcare linen and medical laundry services.

“We are thrilled to announce the creation of Great Kitchens,” said Henk Hartong III, the chairman and CEO of Brynwood. “We are excited to return to the private label pizza space with this new investment.  Our prior investment in the private label frozen pizza space with Richelieu Foods was very successful and we are confident in the prospects for Great Kitchens. We look forward to bringing a significant level of investment in new products and recipe innovations to our retail partners through our best-in-class facilities.”

Richelieu Foods, a private label manufacturer of frozen pizza and salad dressings and one of Brynwood’s most successful investments, was a portfolio company of Brynwood’s fifth fund that was acquired in 2005 from Weiss, Peck & Greer, and was sold to Centerview Partners in 2010.

“On behalf of Brynwood Partners, I would like to sincerely thank the ARYZTA team for being such great partners on this carveout. This is the first deal we have done together, and we look forward to continuing our relationship,” said Ian MacTaggart, president, CFO and COO of Brynwood.

Greenwich, Connecticut-based Brynwood is an operationally-focused firm that makes control investments in North American-based lower middle-market companies. The firm targets non-core brands or companies operating exclusively in the consumer sector. Since its founding in 1984, Brynwood has acquired more than 56 brands from 21 different corporate sellers. The formation of Great Kitchens and the buy of ARYZTA’s pizza business was funded through Brynwood Partners VIII LP which closed in January 2018 with $649 million of capital.

Founded in 1897, Zurich-headquartered ARYZTA is one of the largest operators of bakeries in the world and sells its products – including breads, cookies, donuts, pastries, buns, and flatbreads – to the foodservice, retail and quick-service restaurant sectors. The company operates 53 bakeries across Europe, North America, South America, Asia, Australia and New Zealand.

BMO Capital Markets was the investment advisor to ARYZTA on this transaction.

© 2020 Private Equity Professional | December 8, 2020

Smucker to Sell Pet Food Brand to Nexus

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Nexus Capital Management has agreed to acquire the Natural Balance pet food business of The J.M. Smucker Co. for $50 million in cash.

Natural Balance is a premium pet food brand specializing in dog and cat food products manufactured with high-quality meats, carbohydrates, fats, fruits and vegetables. The company’s products are sold through specialty retailers and e-commerce channels.

In the fiscal year ending in April 2020, the business had net sales of $220 million. Natural Balance is headquartered near Los Angeles in Burbank, California.

The Natural Balance dog food brand was founded by actor, comedian, businessman, and animal welfare advocate Dick Van Patten in 1989. The business was acquired by Big Heart Pet Brands (then Del Monte Pet Foods) in May 2013 and acquired by J.M. Smucker in March 2015.

“We are extremely excited by the opportunity to acquire the Natural Balance business,” said Damian Giangiacomo, a partner at Nexus. “We believe in the brand’s strong legacy and the ability to reinvigorate the business as an independent company in partnership with the strong management team we have assembled.”

Once this transaction closes – expected by the end of January 2021 – Brian Connolly will be named as the new CEO of Natural Balance. Mr. Connolly is the co-founder of pet food maker Castor & Pollux and a former board member of  Merrick Pet Care. In 2012, Merrick, then a portfolio company of Swander Pace Capital, acquired Castor & Pollux. Swander Pace exited Merrick in 2015 through a sale of the company to Nestlé Purina.

“We are pleased to announce that Brian will lead the new Natural Balance business as CEO,” added Mr. Giangiacomo. “Brian played a critical role on our deal team throughout due diligence and crafting the go-forward strategic and operating plan for the business. Brian’s successful 20 years of experience in pet food as the co-founder of Castor & Pollux and former board member at Merrick Pet Care ideally position the Natural Balance brand for continued relevance with pet specialty retailers and pet owners.”

Nexus makes investments of $20 million to $150 million in opportunistic credit, structured investments, and private equity across a range of industries including industrials, consumer & retail, food & beverage, services, education, and distribution & logistics. The firm was co-founded in 2013 by ex-Apollo Global professionals Damian Giangiacomo and Michael Cohen and is headquartered in Los Angeles.

“The sale of Natural Balance reflects our strategy to direct investments and resources toward areas of the business that will generate the greatest growth and profitability,” said CEO Mark Smucker. “Today’s announcement helps the company further focus on the core brands within our pet food and pet snacks portfolio including Milk-Bone and Meow Mix among others, which together create a unique portfolio with significant long-term growth potential that meets consumer needs across value, mainstream and premium offerings.”

The J. M. Smucker Company (NYSE: SJM) is a manufacturer of fruit spreads, ice cream toppings, beverages, shortening, peanut butter, and other products. The company was founded in 1897 and is headquartered near Akron in Orrville, Ohio.

© 2020 Private Equity Professional | December 8, 2020

Huntsman Closes Second Advanced Materials Buy

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Audax Private Equity has agreed to sell specialty chemical maker Gabriel Performance Products to publicly traded Huntsman Corporation for $250 million in cash.

Akron-headquartered Gabriel Performance Products is a maker of specialty additives and epoxy curing agents used in the coatings, adhesives, sealants and composite end-markets. Gabriel operates three manufacturing facilities in Ohio, Pennsylvania and South Carolina.

Gabriel had revenues of $106 million in 2019 with an adjusted EBITDA of $23 million. This yields an 11x EBITDA valuation multiple and, according to Huntsman, an 8x valuation multiple of pro forma adjusted EBITDA including expected synergies.

Huntsman has been actively pursuing transactions in 2020. In May, Huntsman acquired CVC Thermoset Specialties, a maker of specialty additives and epoxy curing agents with two manufacturing facilities in Ohio and New Jersey, for $300 million in cash from Emerald Performance Materials, a portfolio company of American Securities. CVC had revenues of $115 million in 2019 and the $300 million purchase price was equal to an adjusted EBITDA multiple of 10x, or 7x if expected operating synergies are included.

“With the buy of Gabriel, we conclude a series of strategic initiatives in our advanced materials division that we started in 2019 before the COVID-19 pandemic,” said Peter Huntsman, the CEO of Huntsman. “Our initial intent was to complete the acquisitions of Gabriel and CVC simultaneously, together with the divestiture of our India DIY business earlier this year. Despite the challenges created by COVID, I am pleased that we have already closed on two of the transactions and intend to close on the acquisition of Gabriel within the first quarter of 2021.”

“The acquisition of Gabriel broadens the offering in our specialty portfolio and is complementary to our recent acquisition of CVC,” said Scott Wright, the president of Huntsman’s advanced materials division. “Gabriel makes highly specialized toughening and curing agents and other additives used in a wide range of composite, adhesive and coatings applications.  We expect that the Gabriel business will strengthen our North America footprint and provide significant commercial synergies.”

Huntsman (NYSE: HUN) is a manufacturer and marketer of a range of chemical products with 2019 revenues of approximately $7 billion. The company has more than 70 manufacturing, R&D and operations facilities in 30 countries and employs more than 9,000. Huntsman is headquartered north of Houston in The Woodlands, Texas and has executive offices in Salt Lake City, Utah.

The buy of Gabriel is expected to close in the first quarter of 2021.

© 2020 Private Equity Professional | December 8, 2020

Nautic Adds-On to Spartech

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Spartech, a portfolio company of Nautic Partners, has acquired Tufpak. Nautic acquired Spartech, a manufacturer of acrylics and extruded plastics, in October 2019 from Arsenal Capital Partners.

Tufpak is a manufacturer of custom and stock engineered plastic films used in biohazard, medical devices and biopharma packaging applications. The company is best known for its autoclave bags and pouches that are used for biohazardous waste containment, transportation and disposal. Autoclave bags are used in high heat sterilization to prevent low-temperature plastics inside the bag from adhering to the walls of the sterilizer or otherwise interfere with the sterilizer equipment.

Other Tufpak products include medical device packaging, biopharmaceutical sampling bags, dust covers for medical devices and appliances, specialty military packaging, closure bags and specimen bags. Tufpak was founded in 1976 and is headquartered 110 miles north of Boston in Ossipee, New Hampshire.

“Tufpak was acquired by our father almost 29 years ago when the company was a commodity bag maker, but with my brothers, we expanded the company vision to become a manufacturer of functional products serving the more attractive technical market,” said Tufpak owner Mike Wadlinger. “By developing a proprietary film-making capability, we have been able to produce complex bag and film structures that satisfy the demanding requirements of multiple markets, most notably the regulated autoclave biohazard bag products used in clinical healthcare markets.”

Spartech’s acrylic products, plastic sheet and rollstock, specialty film laminates, and thermoformed packaging products are used by more than 1,000 customers in a range of applications in the aerospace, defense, healthcare, industrial, automotive, consumer goods, and packaging sectors. Spartech, led by CEO John Inks, operates 14 US-based facilities and is headquartered near St. Louis in Maryland Heights, Missouri.

“This acquisition expands our product line to include medical and biohazard plastic film capabilities with industry-leading packaging for biological, chemical, pharmaceutical and laboratory research applications,” said Mr. Inks. “We have always admired Tufpak’s focus on innovative plastic film development and are proud to welcome them to the Spartech team.”

“Spartech’s management team is one of the best I have worked with and it is very impressive what they have accomplished to transform the business in a short time,” said Chris Pierce, a managing director of Nautic. “The Tufpak acquisition is consistent with our strategy to increase Spartech’s healthcare business and add new capabilities and high margin products to the portfolio. With the Wadlingers’ continued involvement in Tufpak and the Spartech leadership team’s experience integrating acquisitions, we are confident that this will be a successful partnership.”

Nautic is a middle-market private equity firm that makes majority equity investments of $25 million to $250 million in companies that are active in the healthcare, industrial products, and outsourced services sectors. In March 2019, the Providence, Rhode Island-based firm held a final closing of Nautic Partners IX LP at its hard cap with $1.5 billion of limited partner commitments.

© 2020 Private Equity Professional | December 8, 2020

Atlas Exits Novipax, Keeps Trays Unit

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Atlas Holdings has sold Novipax, a maker of absorbent pads, to ACON Investments. Novipax was formed by Atlas in 2015 to acquire the North American foam tray and absorbent pad businesses of publicly traded Sealed Air.

According to Novipax, it is the largest US producer of absorbent pads that are used in the packaging of fresh meat and poultry. In addition to these conventional pad products, the company also produces an array of specialty products with enhanced features that provide greater absorbency, shelf-life extension, theft sensors, odor reduction, and temperature resistance.

Customers of Novipax include protein processors, tray manufacturers, distributors and grocery chains. Novipax is headquartered near Chicago in Oak Brook, Illinois and operates four manufacturing facilities in Pennsylvania, North Carolina, Mississippi and California.

Novipax’s roots date back to 1965 when W.R. Grace acquired Wyomissing Paper to create its Formpac trays business. The first Formpac facility was built in 1966 in Reading, Pennsylvania, and the second was constructed in Indianapolis, Indiana in 1980. In 1988, W.R. Grace sold Formpac to Sealed Air which created a trays and absorbent pads division under the Cryovac brand. In 2015, Atlas Holdings formed Novipax to acquire Sealed Air’s trays and absorbent pads division. A year later, Novipax acquired Paper Pak Industries, a California-based maker of absorbent products used in the food, medical and safety applications.

The sale of Novipax to ACON excludes the company’s trays business which manufactures expanded polystyrene foam trays that are sold to food processors, supermarkets and food distributors. This business now operates as NPX ONE and is led by CEO Ron Leach, the former CEO of Novipax. NPX ONE is headquartered in Reading, Pennsylvania and has two production facilities in Indianapolis and Reading.

“NPX ONE is well-positioned to deliver superior service to the food producers who rely on us for their packaging needs, and we’re excited to begin this journey as a standalone business,” said Mr. Leach. “We also look forward to continuing our relationship with Novipax as a supplier of absorbent pads for the trays we produce at NPX ONE.”

“The sale of this market-leading absorbent pads business effectively illustrates a core Atlas investment strategy; acquire complicated assets in a corporate divestiture and then transform the company operationally, financially and culturally via a long-term partnership with a superb management team,” said Sam Astor, a partner at Atlas. “We could not be prouder of the work done by Novipax’s leadership and its entire workforce of skilled associates. While we’re sad to see great friends and colleagues leave the Atlas family, we are equally excited today to launch NPX ONE as a leading national protein tray company.”

Atlas is an industrial holding company that has more than 22 platform companies operating in a wide range of sectors with more than $8 billion in total revenues, more than 25,000 employees, and more than 200 facilities worldwide. The company was founded in 2002 and is headquartered in Greenwich, Connecticut.

ACON invests in middle-market companies in the United States and Latin America. The firm was founded in 1996 and has $5.6 billion of capital under management. ACON has US offices in Washington DC (headquarters) and Los Angeles, and international offices in Brazil, Columbia, and Mexico.

Houlihan Lokey was the financial advisor to Atlas on this transaction.

© 2020 Private Equity Professional | December 4, 2020

Altair Carves Screws and Barrels Business from Nordson

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Publicly traded Nordson has agreed to sell its the screws and barrels (S&B) product line, part of its polymer processing systems division, to Altair Investments.

The S&B business manufactures screws and barrels that are used in plastic injection and extrusion machinery by plastics processors and equipment OEMs. S&B has over $70 million in annual revenues and has more than 500 employees.

The S&B business is part of Nordson’s polymer processing systems which was acquired through the 2012 acquisition of Xaloy, a New Castle, Pennsylvania-based manufacturer of plastic injection molding and extrusion machinery, for $200 million.

Nordson (NASDAQ: NDSN) manufactures products and systems that are used for the precision dispensing of adhesives, coatings, sealants, biomaterials, polymers, plastics and other materials; for UV curing and plasma surface treatments; and for testing and inspection. The company’s products are used in a wide variety of product assembly and finishing applications in the packaging, electronics, medical, appliances, energy, transportation, and construction sectors. Nordson, led by CEO Sundaram Nagarajan, was founded in 1954 by the Nord family and is headquartered near Cleveland in Westlake, Ohio.

According to Nordson, the S&B business no longer fits with its strategic plan which is now focused on other precision technologies. “This strategic portfolio transaction will improve the company’s ongoing earnings and require a one-time, non-cash asset impairment charge of approximately $87 million,” said CFO Joseph Kelley. “This action underscores our commitment to align and focus our resources with the best strategic opportunities for long-term profitable growth.”

Altair makes control investments in companies that have revenues of more than $10 million and EBITDA from $2 million to $10 million. Typical enterprise values range from $2 million to $50 million. Sectors of interest include financial and business services; consumer, retail and dining; distribution and logistics; industrial, manufacturing and energy; technology, media and telecom; and healthcare. The firm was founded in 2019 and is headquartered north of Dallas in Frisco, Texas.

© 2020 Private Equity Professional | December 4, 2020