Archives for August 10, 2023

Publicly traded Veritiv Corporation, a provider of packaging, janitorial and sanitary, and hygiene products, has agreed to be acquired by Clayton, Dubilier & Rice for $2.3 billion.

Veritiv (NYSE: VRTV) operates through three segments; packaging, facility solutions, and print. The packaging segment provides paper-based, rigid, flexible (shrink and stretch films and tapes), cushioning, and engineered packaging as well as glass, metal, and plastic packaging. Within facility solutions, the company’s cleaning, breakroom, and supplies include towels and tissues, personal protective equipment, and cleaning chemicals. Veritiv’s print segment distributes commercial printing, writing, copying, paper, and graphics products. This segment also provides print management, paper procurement, and supply chain management services.

Veritiv was founded in 2013 and is headquartered near Atlanta in Sandy Springs, Georgia, and has 125 distribution centers throughout the United States, Canada, and Mexico.

For the twelve months ending June 30, 2023, Veritiv’s Adjusted EBITDA was $478 million, and its free cash flow (FCF) was $339 million. Based on the $2.3 billion purchase price the Adjusted EBITDA multiple is 4.8x and the FCF multiple is 6.8x.

“This agreement is a pivotal moment in Veritiv’s history,” said Sal Abbate, the chief executive officer of Veritiv. “CD&R’s interest in our company is a testament to our team’s hard work, innovation, and dedication. Fueled by this partnership, we will continue to evolve towards our greatest potential, delivering innovative and sustainable solutions to our customers today – and into the future.”

“Veritiv is a very well-positioned industry leader with differentiated capabilities that deliver value to customers,” said Rob Volpe, a partner at CD&R. “We look forward to supporting Veritiv’s talented leadership team in this next phase of the company’s growth, as they continue to pursue their long-term strategic objectives while maintaining an unwavering commitment to employees, suppliers, and customers.”

“As Veritiv’s largest shareholder, we are supportive of this transaction,” said Greg Ciongoli, a partner at Baupost Group, a Boston-based hedge fund. “The Veritiv management team has successfully executed on its multi-year strategy to drive significant growth and they have built substantial value in the business, which is reflected in the premium paid for the shares. Combined with CD&R’s business-building expertise, we believe Veritiv’s future is very bright.”

New York and London-based CD&R invests in European and United States-based businesses. Since its founding in 1978, the firm has invested more than $40 billion in over 100 companies across a range of industries including industrials, healthcare, business services, consumer, technology and financial services.

Morgan Stanley & Co. was the financial advisor to Veritiv. Guggenheim Securities and Wells Fargo Securities were the lead financial advisors to CD&R.

Committed financing for the buy of Veritiv is being provided by Goldman Sachs, RBC Capital Markets, Wells Fargo Securities, BMO Capital Markets, and UBS Investment Bank.

© 2023 Private Equity Professional | August 10, 2023

Willis & Smith Capital has acquired Performance Stamping, a provider of metal stamping services.

Performance Stamping’s customers include domestic and international original equipment manufacturers in the appliance, automotive, water treatment, oil and gas, utilities, industrial services, and HVAC sectors. The company’s capabilities include deep draw and progressive die stamping, compound and blanking die stamping, and various engineering consulting services ranging from tooling design, material selection, and failure, fatigue, and stress analysis.

Performance Stamping was founded in the 1970’s and operates two facilities with a combined 85,000 square feet and is headquartered northwest of Chicago in Carpentersville, Illinois. The company was acquired in 1979 by Scott Spencer and his father Ed Spencer.

Post closing, the company’s longtime management will continue in place, with Peter Martel acting as chief executive officer, and Scott Spencer as an advisor to the company and its board of directors.

“We believe the addition of Performance Stamping to our portfolio, alongside J&E Companies, our sheet metal fabrication and machining group of companies, will provide tremendous value for their collective customers. We’re proud to offer the choice of more services at greater scale,” said Eric Willis and Terrence Smith, co-founders of Willis & Smith, in a released statement.

J&E Companies provides fabrication and machining services to companies in the medical, aerospace, commercial, and agricultural industries. The business, comprised of J&E Manufacturing (acquired in July 2022) and R&B Grinding (acquired in February 2022), operates six facilities in Minnesota (4), Wisconsin, and Mexico, with a combined 450,000 square feet of production space and 325 employees. J&E Companies is headquartered near Minneapolis in Plymouth, Minnesota.

“Transitioning Performance Stamping wasn’t a decision I and the management team took lightly. We were determined to find a successor dedicated to our employees who could offer our customers synergies others couldn’t,” said Scott Spencer. “As we got to know Eric and Terry of Willis & Smith Capital, we knew they were committed to that goal. I’m enthusiastic to continue as an advisor to the company and actively help write this next chapter.”

Willis & Smith Capital invests in lower middle market companies with annual revenues of up to $200 million and up to $15 million of EBITDA (including negative EBITDA). Sectors of interest include manufacturing, distribution, logistics, industrial service companies, engineering, and construction. The firm is headquartered northeast of Dallas in Plano, Texas.

“We commend Scott Spencer and his father for their dedication in developing Performance Stamping into an organization capable of looking into the future and understanding its customers’ evolving technical and business needs,” added Messrs. Willis and Smith.

Promontory Point Capital was the financial advisor to Performance Stamping.

© 2023 Private Equity Professional | August 10, 2023

Olympus Partners has acquired MEI Rigging & Crating from Dorilton Capital.

MEI is a provider of industrial services including rigging and machinery moving, millwrighting and mechanical installation, industrial storage, and equipment crating and export packing. MEI’s customers are active in a range of industrial verticals including datacenters, semiconductors, and electric vehicles. MEI moves all types of heavy and intricate machinery for its customers including one-off moves to entire plant relocations.

MEI, led by CEO Dan Cappello, is headquartered near Salem in Albany, Oregon, and operates a network of 12 regional offices across the United States.

“I am confident that Olympus is the right financial partner to facilitate MEI’s next phase of growth,” said Mr. Cappello. “Our best-in-class team has made great progress in building a national platform for our services, but we’ve only scratched the surface of the potential growth opportunities that lie ahead for MEI.”

Dorilton acquired MEI in 2019 and during its ownership term added on to the platform with the buys of California-based Dunkel Bros Machinery Moving (2019); Nevada-based Reno Custom Crating (2021); Virginia-based A&A Transfer (2022); and Massachusetts-based Harnum Industries (2022).

“MEI has built a national platform in a niche industrial services space that has been highly fragmented to date,” said Dave Cardenas, a managing partner at Olympus. “This scale uniquely positions MEI to take advantage of several long-term industry tailwinds.”

Olympus invests in a range of industries but has a specific interest in business services, consumer products, healthcare services, financial services, industrial services, and manufacturing. The firm was founded in 1988 and is based in Stamford, Connecticut.

“We could not be more excited to partner with Dan and the rest of the MEI team,” said Sam Greenberg, a principal at Olympus. “The thing that stood out to us most during the process was the quality of the people throughout the organization. We look forward to supporting the team on their mission to provide the safest and most reliable rigging, crating, and storage services nationally.”

In addition to Messrs. Cardenas and Greenberg, the Olympus transaction team also included Vice President George Swenson and Vice President Marty Durkin.

Monroe Capital (NASDAQ: MRCC) was the joint lead arranger on a senior credit facility to support the acquisition of MEI by Olympus. Monroe provides senior and junior debt financing to middle-market businesses, special situation borrowers, and both private equity and independent sponsors. Investment types include direct lending, asset-based lending, specialty finance, opportunistic and structured credit, and equity co-investments. The firm, founded in 2004, is headquartered in Chicago with 10 offices throughout the United States and Asia.

Dorilton Capital, the seller of MEI, makes control investments in middle market companies that have from $4 million to $30 million of EBITDA. Sectors of interest include business services, industrial services, healthcare services, commercial services. The firm was founded in 2009 and is headquartered in New York City.

Lazard Freres was the financial advisor to Dorilton Capital on this transaction.

© 2023 Private Equity Professional | August 10, 2023