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KKR Has Partial Exit from Alliance Boots

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Kohlberg Kravis Roberts has announced that Walgreen Co., the largest drug store chain in the US, and Alliance Boots, a leading international pharmacy-led health and beauty group and a KKR portfolio company, have agreed to form a strategic partnership to create the first global pharmacy-led, health and wellbeing enterprise. Under the terms of the agreement announced today, Walgreens will acquire a 45% equity stake in Alliance Boots.

KKR will receive $1.8 billion in cash and seven million Walgreens shares of common stock equivalent to $200 million at the Walgreens closing share price of $31.96 on June 18, 2012 for the 45% stake. Walgreens has the option, but not the obligation, to acquire the remaining 55% equity interest in Alliance Boots during the six-month period beginning two and a half years after the initial closing.

“In 2007, we made a commitment to accelerate the development of Alliance Boots. Following five years of successful performance, both in the UK and overseas, the company is now in a better position than ever before. The partnership announced today is about building upon that success and laying the foundation for future growth,” said Dominic Murphy, Member of KKR, who leads KKR’s activities in The United Kingdom and Ireland.

In 2007, KKR invested $2.45 billion in Alliance Boots, consisting of approximately $1.4 billion from the KKR 2006 Fund, approximately $750 million from its European Fund II and approximately $300 million from KKR’s balance sheet.

KKR made its investment in Alliance Boots in partnership with Stefano Pessina, Executive Chairman of Alliance Boots. Since then, Alliance Boots has delivered strong growth, building a presence in more than 25 countries and employing over 116,000 people. Alliance Boots’ pharmacy-led health and beauty retail businesses now operate more than 3,330 health and beauty retail stores in 11 countries and its pharmaceutical wholesale businesses supply medicines, other healthcare products and related services to more than 170,000 pharmacies, doctors, health centers and hospitals in 21 countries.

“Over these last five years, KKR has been a strong, supportive, entrepreneurial partner to Alliance Boots. KKR has constantly been committed to helping the Alliance Boots’ leadership team to grow the company and to create sustainable value in the long term. Our joint focus is now on forging with Walgreens the world’s first global pharmacy-led health and wellbeing enterprise,” said Stefano Pessina, Executive Chairman of Alliance Boots.

KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $62 billion in assets under management. In addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).

Water Street Healthcare Partners Exits OraPharma

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Valeant Pharmaceuticals International announced today that it has agreed to acquire OraPharma, a specialty oral health company and a portfolio company of Water Street Healthcare Partners. Total consideration is approximately $312 million and up to $114 million in potential contingent payments based on certain milestones, including revenue targets. As of March 31st, 2012 OraPharma’s trailing twelve month net revenue was approximately $95 million with the business growing at a high single digit rate.

OraPharma is a specialty oral health company that develops and commercializes products that improve and maintain oral health. OraPharma’s lead product is Arestin, a locally administered antibiotic for the treatment of periodontitis that utilizes a controlled-release delivery system and is indicated for use in conjunction with scaling and root planing for the treatment of adult periodontitis. The company is based in Horsham, PA (www.orapharma.com).

Water Street Healthcare Partners is a Chicago-based private equity firm focused exclusively on healthcare. The firm has more than $1 billion of capital under management. The firm has particular expertise in corporate divestitures from healthcare companies (www.waterstreet.com).

Valeant Pharmaceuticals International is a multinational specialty pharmaceutical company that develops, manufactures and markets a range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. The company is based in Montreal (www.valeant.com).

Bertram Capital Exits EDI Holdings

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Capital announced today the sale of EDI Holdings, a designer and manufacturer of extrusion dies, to Nordson Corporation in a $200 million all cash transaction. The sale is Bertram Capital’s second portfolio company exit in the last twelve months.

EDI Holdings is a designer and manufacturer of extrusion dies, coating heads and related products for producers of cast film, sheet, coatings and laminates. The company is based in Chippewa Falls, WI (www.extrusiondies.com).

Bertram Capital completed the acquisition of EDI in December 2010. By applying the “Bertram High 5”, a systematic approach to business building, Bertram Capital worked with the EDI team to streamline manufacturing operations and increase throughput, expand product categories and sales channels, enhance management, extend its technology and patent portfolio and augment its global operations. Consistent with the firm’s strategy of maintaining operating flexibility in order to promote growth, Bertram Capital capitalized EDI with conservative debt levels.

“EDI’s rapid growth and the successful result of the investment underscore the impact of our differentiated buy and build approach. We successfully executed on our plan to leverage EDI’s presence as a leader in the attractive plastic processing equipment market to capture significant growth and create a must-have strategic asset,” said Jeff Drazan, Managing Partner at Bertram Capital. “The Bertram Capital team, led by Kevin Yamashita, did exceptional work throughout this investment and I am pleased that the team’s efforts delivered such a favorable outcome for Bertram Capital and our limited partners.”

In addition to operational improvement initiatives, Bertram Capital supported EDI with its acquisition of Premier Dies Corporation in March 2012. The acquisition broadened EDI’s product offering, expanded its global sales and service network and provided incremental manufacturing capacity. The acquisition, along with Bertram Capital’s growth-focused approach of aggressive business development and operational improvements is expected to result in significant organic revenue and EBITDA increases.

“Bertram Capital provided EDI with the financial and strategic resources to improve and expand the company’s product capabilities, broaden its international sales and manufacturing presence and complete the acquisition of Premier Dies. Ultimately, these efforts strengthened the business and positioned EDI for long term success,” said Gary Edwards, President and CEO of EDI. “It has been a pleasure partnering with the Bertram Capital team.”

Bertram Capital has over $850 million in capital under management and targets investments in lower middle market companies. Industries of interest include manufacturing, technology, business services and health care. The firm is located in San Mateo, CA (www.bertramcapital.com).

“With the closing of the EDI transaction, we mark the completion of another successful investment,” said Kevin Yamashita, Partner at Bertram Capital. “Through the addition of key management, engineering, sales and operational resources to EDI’s core team, we quickly built a world-class organization. The combined efforts of the EDI team and Bertram Capital solidified EDI’s presence as a global market leader and significantly accelerated profitable growth in the business. Nordson identified EDI as a highly accretive addition to its existing business in plastic processing and presented a compelling offer to acquire the company.”

Gryphon Investors Exits Intelligrated

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Gryphon Investors announced today that it has agreed to sell its portfolio company Intelligrated, a provider of automated material handling solutions, services and products, to private equity firm Permira in a transaction valued at more than $500 million.

Intelligrated designs, manufactures and installs complete material handling automation solutions for the warehousing, distribution, consumer product manufacturing, postal and parcel markets. Solutions include conveyor systems, sortation systems, palletizers and robotics, order fulfillment systems, warehouse control software and advanced machine controls. Intelligrated will remain headquartered in Mason, OH and will retain its operations throughout the United States and in Canada, Mexico and Brazil (www.intelligrated.com).

In partnership with CEO Chris Cole and President & COO Jim McCarthy, Gryphon built Intelligrated into a market leader through the combination of two synergistic acquisitions, numerous new product introductions and the hiring of leading executive talent from throughout the industry. Despite the recession of the past few years, Gryphon and management tripled the size of Intelligrated through the strategic acquisition in June 2009 of the North American assets of FKI Logistex from Melrose.

“After many years of partnership with Intelligrated’s management team, we are delighted to have signed a definitive agreement to sell Intelligrated in a successful transaction for Gryphon’s limited partners, co-investor Tudor Ventures and management shareholders. Gryphon’s unique investment thesis supported Intelligrated’s growth from a small company to North America’s leading industry competitor through aggressive organic growth initiatives, the transformative acquisition of Logistex and perseverance through two industry cycles,” said David Andrews, Gryphon’s CEO and Managing Partner.

“Gryphon has been an exceptionally strong partner for Intelligrated and has added significant value and support as the company has pursued its multi-pronged strategy to become the North American market leader with more than $500 million of revenue,” said Chris Cole, the CEO of Intelligrated. “In particular, management appreciates Gryphon’s deal-making, capital investment and integration planning leadership to consummate the Logistex acquisition during the extraordinarily difficult second quarter of 2009. The transition now from U.S.-focused Gryphon to Permira with its global capabilities is very exciting given Intelligrated’s plans to accelerate our expansion outside of North America on an organic basis and through further acquisitions.”

Gryphon Investors makes leveraged acquisitions and growth investments in middle-market companies. The firm invests from $25 to $100 million of capital in companies with sales ranging from $25 to $250 million. Sectors of interest include business services, consumer and retail, automotive, chemical, general manufacturing, health care and hotels. The firm is based in San Francisco, CA (www.gryphoninvestors.com).

Robert W. Baird & Co. served as lead financial advisor to Intelligrated and Gryphon, while Credit Suisse also acted as an advisor. Kirkland & Ellis provided legal counsel.

Olympus Exits Tank Holdings

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Olympus Partners today announced that an agreement has been executed to sell its portfolio company Tank Holdings to Leonard Green & Partners in partnership with the management team. Tank is a designer and manufacturer of rotationally-molded polyethylene and steel containers.

Olympus and management created Tank in September 2008 through the combination of Snyder Industries and Norwesco. Since 2008, the company has integrated seven tuck-in acquisitions, which have enhanced Tank’s product lines and geographic reach.

Norwesco is a manufacturer of polyethylene tanks primarily for agricultural, water, and below-ground septic applications. Founded in 1939, the company has 17 facilities in North America. Norwesco is based in St. Bonifacius, MN (www.norwesco.com).

Snyder Industries is a polyethylene and steel tank manufacturer serving the agricultural, industrial, oil and gas, and septic markets in North America. The company operates six facilities across the U.S and is based in Lincoln, NE (www.snydernet.com).

“Tank has been a very successful investment for Olympus. We have been very fortunate to back a very talented and seasoned management team led by Tom Smith and Tom O’Connell and work with them to drive the growth of the business and to further solidify their strengths in the marketplace,” said Manu Bettegowda of Olympus Partners.

Olympus Partners, with $3 billion of capital under management, provides equity capital for middle market management buyouts and for companies needing capital for expansion. Sectors of interest include: business services; transportation and logistics services; healthcare manufacturing and services; financial services; consumer and restaurant; and software and IT services. The firm is based in Stamford, CT (www.olympuspartners.com).

Leonard Green & Partners’ invests in middle-market companies with market-leading franchises and defensible competitive positions, attractive growth prospects and proven management teams. The firm’s investments are in the form of traditional buyouts, going-private transactions, recapitalizations, growth capital investments, corporate carve-outs and selective public equity and debt positions. Sectors of interest include retail, distribution, healthcare, aerospace/defense and consumer/business services. Leonard Green & Partners was established in 1989 and manages approximately $15 billion of equity capital. The firm is located in Los Angeles, CA (www.leonardgreen.com).

Gary Matt, Richard Siegel, Hank Johnson and Nick Parks of Barclays advised Tank and Olympus on the transaction. Olympus was represented by John Schoenfeld and Rob Kiburz of Kirkland & Ellis. Leonard Green & Partners was represented by Howard Sobel and John Giouroukakis of Latham & Watkins.

Fenway Partners Exits Panther Expedited Services

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Fenway Partners today announced that it has entered into an agreement to sell Panther Expedited Services, a provider of expedited ground transportation services, to Arkansas Best Corporation for approximately $180 million.

Panther Expedited Services is a provider of expedited ground transportation services for time-critical transportation needs. Panther provides door-to-door transportation services for more than 11,000 customers worldwide, including Fortune 500 corporations, government agencies and blue-chip transportation service providers. The company was founded in 1992 and is based in Seville, OH (www.pantherii.com).

“During Fenway’s ownership of Panther, we partnered with management to significantly grow and diversify the company’s revenue base, broaden and deepen the management team, improve the customer value proposition, and increase earnings and domestic headcount. We transitioned Panther from the entrepreneurial stage to a professionally managed business, and are pleased that Arkansas Best, a very well respected transportation company, is making this strategic acquisition,” said Peter Lamm, Co-Founder and Managing Partner of Fenway Partners.

Fenway Partners is a middle market private equity firm based in New York with approximately $1.6 billion under management. The branded consumer product industry is a sector of particular interest to the firm. Fenway makes control investments in businesses with $100 million to $600 million in enterprise value and $15 million to $75 million in EBITDA. Equity investments generally range from $50 million to $75 million (www.fenwaypartners.com).

“Since acquiring the company in 2005, we have worked closely with Founder Daniel Sokolowski, CEO Andrew Clarke and their team at Panther to achieve our goal of transforming the company into the leading provider of premium transportation and logistics services and the largest independently-owned provider of expedited ground transportation in North America,” said Timothy Mayhew, Managing Director of Fenway Consulting Partners and a member of Panther’s Board of Directors. “Amongst other notable accomplishments, we expanded Panther’s global freight forwarding network, which significantly broadened the market in which the company operates. Not only has this been a successful investment for Fenway, we are confident that this transaction with a well-respected strategic buyer like Arkansas Best will best position Panther and its employees for future growth and enduring success during the next phase of its development.”

J.P. Morgan acted as financial advisor and Scudder Law Firm served as legal advisor to Fenway on this transaction.

Fenway Partners Exits 1800CONTACTS

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Fenway Partners today announced that it has entered into an agreement to sell 1800CONTACTS to WellPoint (NYSE: WLP). The transaction is expected to close in the third quarter of 2012.

“We are very pleased with the outcome of our investment in 1800CONTACTS. Fenway’s experience with this company is an instructive example of private equity partnering with management to create a better business – growing revenues, increasing domestic employment and payrolls, improving the customer value proposition and making significant investments in the future. We are delighted to have made such a positive impact on this company and that our Fenway Partners Fund investors will realize an attractive rate of return and an impressive multiple of capital,” said Peter Lamm, Co-Founder and Managing Partner of Fenway Partners.

1800Contacts is a direct-to-consumer independent retailer of contact lenses. The company is based in Draper, UT (www.1800contacts.com).

“We have enjoyed partnering with Jonathan Coon, Brian Bethers and the talented 1800CONTACTS team, and are proud of the role we have played in this outstanding company’s growth and development over the last five years. Since Fenway acquired the company in 2007, 1800CONTACTS has experienced strong growth and achieved exceptional financial and operational performance. Recent initiatives such as launching a mobile app and entering the eyewear market with Glasses.com have ensured that 1800 CONTACTS remains at the forefront of innovation. With the opportunities presented by its new partnership with WellPoint, we believe that 1800CONTACTS is poised to continue to grow and further strengthen its industry-leading franchise,” said Timothy Mayhew, Managing Director of Fenway Consulting Partners and Chairman of 1800CONTACTS.

Fenway Partners is a middle market private equity firm based in New York with approximately $1.6 billion under management. The branded consumer product industry is a sector of particular interest to the firm. Fenway makes control investments in businesses with $100 million to $600 million in enterprise value and $15 million to $75 million in EBITDA. Equity investments generally range from $50 million to $75 million (www.fenwaypartners.com).

Sonenshine Partners acted as exclusive financial advisor and Ropes & Gray served as legal advisor on this transaction.

The Sterling Group Exits Roofing Supply Group

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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.

Eureka Growth Capital Exits Total Military Management

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Eureka Growth Capital today announced the sale of its investment in Total Military Management (“TMM”), a business process outsourcing company focused on the management of U.S. military and government household relocations, to TZP Capital Partners. “The Eureka team was a perfect fit for TMM,” said CEO Matt Connell. “Their business knowledge and experience aided us greatly and helped guide us through tremendous growth and industry challenges. Given the personal touch incorporated by Eureka, I could not imagine a better partnership or outcome.”

Total Military Management provides non-asset based logistics services used in the management of domestic and international U.S. military household relocations. TMM works with carriers, agents and other service providers to manage the complexities of procuring military moves, military base transportation procedures, and the systems put in place by the Department of Defense for authorization to conduct business with military base transportation offices. The company was founded in 2003 is headquartered in Jacksonville, FL (www.totalmm.com).

“With tremendous leadership from CEO Matt Connell and COO Kent Stermon, TMM grew rapidly during our partnership, executing a collaborative plan to increase penetration in specific geographic markets as well as expansion into entirely new markets,” said Chris Hanssens, Managing Partner of Eureka and former Chairman of TMM.

Eureka Growth Capital makes control and non-control investments in companies with $10 million to $75 million in revenue. Initial equity investments range from $4 million to $10 million, but larger investments can be made with co-investment from the firm’s limited partners. The firm prefers investment opportunities in the Mid-Atlantic and Eastern US. The firm was founded in 1999 and is based in Philadelphia, PA (www.eurekagrowth.com).

TZP Capital Partners makes control investments of between $20 million and $50 million in companies with enterprise values up to $200 million. Sectors of particular interest include real estate and relocation services, franchising, outsourced business and IT services, travel content and distribution, marketing and media services, and specialty finance. The firm is based in New York, NY (www.tzpgroup.com).

Edgeview Partners served as the exclusive financial advisor to Eureka and TMM.

Bain Exits Motorized Vehicles Division of FCI

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Delphi Automotive announced today that it has entered into exclusive negotiations and has made a binding offer to acquire FCI Group’s (“FCI”) Motorized Vehicles Division (“MVL”), a manufacturer of automotive connection systems and a portfolio company of Bain Capital. The transaction is valued at €765 million on a cash and debt-free basis (approximately $972 million at current exchange rates) and is expected to close by year-end 2012.

MVL, which will become part of Delphi’s Electrical/Electronic Architecture segment, is a provider of interconnection systems for a range of applications in the safety restraint systems, powertrain and electrical vehicles markets. MVL had revenue of €692 million in the year ended December 31, 2011.

FCI is a manufacturer of connectors for use in electronic, micro-connector, electrical, and automotive applications. The company was acquired by Bain in 2005. FCI is based in Guyancourt, France (www.fci.com).

Bain Capital manages several pools of capital, including private equity, venture capital, and public equity and leveraged debt assets. The firm has more than $66 billion in assets under management. Since its inception in 1984, Bain Capital has made private equity investments and add-on acquisitions in more than 300 companies in a variety of industries around the world. The firm has offices in Boston, New York, Chicago, London, Munich, Tokyo, Shanghai, Hong Kong and Mumbai, with over 800 employees worldwide (www.baincapital.com).

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