The Sterling Group today announced that it has finalized the sale of Roofing Supply Group (RSG) to Clayton, Dubilier & Rice. Roofing Supply Group is the fourth largest distributor of roofing supplies and related materials in the United States, with 59 locations in 24 states. “RSG has always had an excellent culture and best in class customer service efforts, but it was the resources and partnership with the Sterling team that enabled us to achieve new levels of success with the business. We look forward to continued growth under our new ownership,” said Mike Farrell, CEO of RSG.
Roofing Supply Group has grown significantly in recent years, driven by strategic and operational initiatives undertaken by The Sterling Group in partnership with management. Since Sterling acquired RSG from its founders in 2006, EBITDA increased by more than 50% despite a record decline in housing starts that has yet to rebound.
“The investment in RSG exemplifies Sterling’s investment philosophy and operational approach,” said Kevin Garland, a Partner at The Sterling Group. “For thirty years, Sterling has focused on partnering with management to drive strategic initiatives and grow businesses for all shareholders, regardless of market cycles. We have worked closely with management to make dramatic improvements to RSG’s procurement, sales, pricing and to expand the company’s network into strategic markets. The result has been what we believe to be outstanding financial performance in the face of difficult end market conditions.”
Roofing Supply Group is one of the largest wholesale distributors of roofing supplies and related materials in the United States. Through its network of 59 branches in 24 states, Roofing Supply Group provides one-step distribution services from roofing product manufacturers to roofing contractors and homebuilders. Each branch carries a complete line of roofing products for residential and commercial roofing, including composition asphalt shingles, underlayment, and associated ancillary products. The company is located in Dallas, TX (www.roofingsupplygroup.com).
The Sterling Group targets controlling interests in basic manufacturing, industrial services and distribution companies that have enterprise values from $100 million to $500 million. Sterling has sponsored the buyout of 41 platform companies and numerous add-on acquisitions for a total transaction value greater than $9.5 billion. The firm was founded in 1982 and is located in Houston, TX (www.sterling-group.com).
Clayton, Dubilier & Rice focuses on producing financial returns through building stronger more profitable businesses. Since inception, the firm has managed the investment of more than $17 billion in 51 US and European businesses representing a broad range of industries with an aggregate transaction value of approximately $80 billion. Founded in 1978, Clayton, Dubilier & Rice is based in New York, NY and London, UK (www.cdr-inc.com).
“RSG is a well-positioned business in a very attractive industry that has built strong customer relationships over time based on superior service and reliability,” said Nathan Sleeper, a Partner at CD&R. “We look forward to partnering with RSG’s exceptional management team to continue to grow the business, strengthen its market presence and enhance its industry-leading operating capabilities.”
Philip Knisely, a CD&R operating advisor, has assumed the Chairman role at RSG. Mr. Knisely is currently Chairman of Atkore International, a manufacturer of electrical and metal products, and prior to that was Executive Vice President and Corporate Officer of Danaher Corporation.
Financing for the transaction was obtained from Deutsche Bank Securities, Goldman Sachs Bank USA, Credit Suisse, UBS Investment Bank and Citigroup. Deutsche Bank Securities and Goldman, Sachs & Co. acted as financial advisors, and Debevoise & Plimpton acted as legal advisor to CD&R. The Sterling Group was advised by Harris Williams in the transaction.
