H.I.G. Capital has completed the sale of Caraustar Industries to publicly-traded Greif for $1.8 billion.
Caraustar is one of North America’s largest integrated manufacturers and converters of 100% recycled paperboard and converted paperboard products. Caraustar serves end-use markets in tube and core, folding carton, gypsum facing paper and specialty paperboard products.
Caraustar has more than 80 operating facilities throughout the United States. The company, led by CEO Mike Patton, was founded in 1938 and is based in Austell, GA (www.caraustar.com).
H.I.G. acquired Caraustar in May 2013 from Wayzata Investment Partners which had acquired the company in 2009 through a pre-packaged chapter 11 process. During H.I.G.’s ownership term Caraustar’s revenue and profitability more than doubled through both organic growth and add-on acquisitions.
“H.I.G. has been thoughtful and supportive of Caraustar since we partnered together in 2013. In addition to supporting Caraustar’s aggressive M&A strategy, H.I.G. has provided us the freedom and flexibility needed to grow the business organically and served as a value-added thought partner to our senior leadership team,” said Mr. Patton.
“As a leader in the recycled paperboard and packaging solutions market, Caraustar’s ability to deliver a broad product portfolio to a national customer base via a low cost, vertically integrated manufacturing network provides a value proposition unmatched in the industry,” said Tenno Tsai, a managing director of H.I.G. “Caraustar is a terrific organization with exceptional leadership, and it has been a pleasure supporting Mike Patton and his team to transform the business – more than doubling Caraustar’s size over our hold period. As a result, Caraustar has delivered an outstanding return for H.I.G. and its investors.”
For the twelve months ended September 30, 2018, Caraustar had sales of $1.4 billion and an EBITDA of $174 million. With a purchase price of $1.8 billion, this equates to a TTM EBITDA valuation multiple of 10.3x. Greif has provided an Adjusted EBITDA (adjusted for current market conditions as of September 30, 2018) of $220 million which results in an Adjusted TTM EBITDA valuation multiple of 8.2x. Grief has also identified approximately $45 million of annual run-rate cost synergies that could be achieved within three years that would further increase the Adjusted TTM EBITDA to a proforma amount of $265 million.
Greif (NYSE: GEF) is a provider of industrial packaging products and services. The company produces steel, plastic and fiber drums, intermediate bulk containers, reconditioned containers, flexible products, containerboard and packaging accessories and provides filling, packaging and other services for a wide range of industries.
Greif has annual revenues of approximately $3.8 billion and operates from 200 facilities in more than 40 countries. The company is headquartered north of Columbus in Delaware, OH (www.greif.com).
H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing and service businesses. H.I.G. has more than $30 billion of capital under management. The firm is based in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, London, Hamburg, Madrid, Milan, Paris, Bogotá, Mexico City and Rio de Janeiro (www.higcapital.com).
© 2019 Private Equity Professional | February 12, 2019
