Sun Capital Partners has sold its portfolio company Demilec, one of North America’s largest manufacturers of spray foam insulation, to Huntsman Corporation. Sun Capital acquired Demilec in October 2013.
Demilec manufactures both rigid and semi-rigid spray polyurethane foam (SPF) insulation that is used in residential and commercial applications. The company’s products are sold directly to insulation installers and well as through distributors. Demilec has annual revenues of approximately $170 million and two manufacturing facilities located in Arlington, TX (headquarters) and Boisbriand, QC (www.demilec.com).
Under the terms of the purchase agreement, Huntsman will pay cash of $350 million for Demilec. Based upon full-year 2018 EBITDA estimates, this represents a purchase price multiple of approximately 11.5x or, if pro forma synergies are included, 7.5x.
“This bolt-on acquisition is a great fit to our core strategy to move downstream,” said Peter Huntsman, Chairman, President and CEO of Huntsman. “The integration of Demilec into our existing polyurethanes business offers significant synergies and delivers substantially higher and very stable margins by pulling through large amounts of upstream polymeric MDI into specialized spray foam systems. This integrated business will have greater than 25% EBITDA margins and double-digit growth.”
“Demilec has pioneered SPF insulation and coating technologies for over 30 years, building a strong market reputation with architects, builders and designers,” said Tony Hankins, President of Huntsman’s Polyurethanes division. “Demilec and the entire SPF industry has delivered strong double-digit growth, which we expect to be sustained as their technology provides outstanding insulation performance in a world which is increasingly concerned with improving energy efficiency. The Demilec team will continue to be fundamental to the ongoing success of the integrated business after the transaction has closed, as we rapidly build our North American platform and aggressively expand the business into international markets.”
Sun Capital invests in leveraged buyouts, equity, and debt in companies that can benefit from its in-house operating professionals and experience. Sun Capital has invested in and managed more than 340 companies worldwide with combined sales in excess of $45 billion since the firm’s inception in 1995. The firm has offices in Boca Raton, Los Angeles and New York, and affiliates in London, Frankfurt, Stockholm and Shenzhen (www.SunCapPart.com).
Huntsman (NYSE: HUN) is a manufacturer and marketer of a range of chemical products with 2017 revenues of approximately $8 billion. The company has more than 75 manufacturing, R&D and operations facilities in 30 countries and employs more than 10,000. Huntsman is headquartered in The Woodlands, TX (north of Houston) and has executive offices in Salt Lake City, UT (www.huntsman.com).
This transaction should close by the end of second quarter 2018.
© 2018 Private Equity Professional | March 15, 2018