Several LBO shops in recent weeks have taken advantage of a reasonably healthy stock market to sell down stakes in public companies whose share prices have bloomed since going public, Buyouts reports in its June 4 edition.
Separate sales on the secondary market by Blum Capital Partners, Clayton, Dubilier & Rice, Oaktree Capital Management, Sun Capital Partners would generate a total of more than $539.8 million.
In the largest offering of the four, CD&R, which bought a 47 percent stake in Sally Beauty Holdings from the Alberto Culver Co. back in 2006, generated more than $400 million in proceeds when it sold 15 million shares in the beauty supplies company for $26.49 per share (plus a repurchase by the company of 200,000 shares from CD&R), an increase of more than three times from its opening share price $7.35 as a new public company in November of 2006. EBITDA at Sally Beauty increased to $536.4 million for the year ended March 31, up from $259.7 million at the time the private equity firm invested in the company, according to Capital IQ.“It was at a point where we thought we’d transformed the company and the markets were recognizing that,” a source close to CD&R told Buyouts.
Oaktree Capital Management, meantime, generated more than $81.5 million in proceeds when it sold more than 3.6 million shares in Spirit Airlines at $22.51 a share, almost 50 percent higher than its debut offering price of $12 a share in its May 2011 IPO.
Department store chain Gordmans Stores Inc. on May 21 announced that an affiliate of Sun Capital Partners would offer 3 million shares at $16.75 per share in the company it acquired in 2008 and took public in 2010 at $11 a share, which would generate more than $50.2 million in proceeds. The company’s stock was trading as high as $17.57 per share on the afternoon of May 25.
Under Sun Capital, the company lowered freight costs, invested in technology and increased cash flow by improving inventory turnover, Jeff Magny, a vice president with the Boca Raton, Fla.-based firm, told Buyouts. EBITDA at the company was $46.6 million for the year ended April 28, more than four times the $10.9 million of EBITDA for the year ended Jan. 31, 2009, according to Capital IQ. “From the time we went public to today, we were able to further improve profitability, which makes the stock very attractive,” Magny told Buyouts.
In the smallest offering, Blum Capital Partners sold 831,100 shares in Career Education at a minimum of $6.48 per share, generating proceeds of at least $5.4 million.
An extended version of this story will be published in the June 4 edition of Buyouts.
(CORRECTION: An earlier version of the story said that Gordmans Stores, backed by Sun Capital, had completed its stock offering. This version was changed to reflect that it had only announced the commencement of the offering on May 21.)
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