Castle Harlan has agreed to sell Tensar Corporation to publicly traded Commercial Metals Company (CMC) for $550 million.
Tensar’s products and services are used in infrastructure and construction projects to provide soil stabilization (using polymer-based geogrids), earth retention, foundation support and erosion and sediment control. The company’s main go-to-market brands include Tensar geogrids and Geopier foundation systems.
Tensar’s customers include commercial, industrial and residential site developers; transportation, coastal and waterway authorities; mining and waste management companies. Tensar is led by CEO Mike Lawrence and is headquartered in Alpharetta, Georgia.
Castle Harlan’s fifth fund, Castle Harlan Partners V LP (CHP V), acquired Tensar in July 2014 from Arcapita.
“We enjoyed working with Castle Harlan over the seven years we were with them,” said Mr. Lawrence. “Their advice and guidance proved to be useful to the growth of the company, and they supported us in establishing our industry-leading team of people. We look forward to a strong future in our markets with significant prospects and still many unmet opportunities.”
The $550 million purchase price for Tensar is equal to 9.2x the company’s expected 2021 EBITDA of $60 million. Including $5 million of cost synergies estimated by CMC, the EBITDA multiple drops to 8.5x. Over the past five years, Tensar’s average EBITDA margin is just over 25%. For a PDF copy of CMC’s investor presentation on the purchase of Tensar click HERE.
“Tensar, a portfolio company of CHP V, has been a successful investment. It has been very gratifying to be able to work with a first-rate management team and to allow the company to grow into becoming the global leader in its field with new products that have a positive impact on addressing the world’s infrastructure needs,” said Marcel Fournier, a senior managing director at Castle Harlan. “We are extremely pleased to see the company find its new place alongside CMC’s other complementary operations.”
Commercial Metals Company (NYSE: CMC) manufactures, recycles, and markets steel and metal products and other related materials through a network of seven electric arc furnace (EAF) mini mills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the United States and Poland. CMC was founded in 1915 by Jacob Feldman and today has annual revenues of more than $5.5 billion with a headquarters in Irving, Texas.
“This compelling acquisition advances CMC’s strategy to expand our leadership in construction reinforcement, with value-added products that complement our existing offering,” said Barbara Smith, the chairman, president and chief executive officer of CMC. “Tensar will create a powerful platform for incremental growth into complementary high-margin engineered products that target CMC’s largest core market, construction, serving end-use markets and customer segments where we have strong and existing relationships.”
Castle Harlan makes control investments in middle-market companies in North America, Europe, and Australia. The firm has raised eight private equity funds – five in the United States and three in Australia – totaling more than $6 billion in capital commitments. Castle Harlan was founded in 1987 and is based in New York City
Morgan Stanley & Co. is the financial advisor to Castle Harlan and Tensar, and Rockefeller Financial is the financial advisor to CMC.
© 2021 Private Equity Professional | December 9, 2021