U.S. private equity firm Carlyle Group is exploring a sale of portfolio company Array Marketing Group, a Canadian provider of retail merchandising displays, that could value it as much as US$1 billion, according to two sources familiar with the matter.
Carlyle is working with investment banks Jefferies and Robert W. Baird to seek out potential buyers for the Toronto-based company, the sources said.
The sources asked not to be identified because the details of the sale process are confidential. Jefferies and Carlyle declined to comment. Array and Baird did not respond to requests for comment.
While Array services customers in the troubled retail industry, it caters predominantly to cosmetics and beauty stores. That segment is considered less vulnerable to the online competition that has bled a number of brick and mortar retailers, because shopping for makeup is experiential and requires trialing in person, one of the sources said.
Cosmetics and fragrance store chain Ulta Beauty, for example, which is one of Array’s customers, reported a 23.7 percent increase in net sales last year, according to company filings. The company plans to open approximately 100 new stores in 2017, after 104 openings in 2016.
Array is being marketed on projected 2017 adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of US$82 million, the sources said.
Carlyle acquired Array in 2015 for an undisclosed sum.
The company went on to purchase a 50 percent stake in Vulkan Retail, a Mexico City-based manufacturer of retail fixtures and displays for brands including Sephora, Victoria’s Secret and Puma, in August 2016. In May, Array bought Summit Manufacturing, a New York-based provider of point of sale merchandising.
Update: Carlyle acquired Array in 2015 from Canadian private equity firm TorQuest Partners. TorQuest and a group of co-investors bought the company from Brentwood Associates in 2012.
TorQuest realized 5x return its invested capital and a 61 percent internal rate of return from Array’s sale to Carlyle.
Array was established in 1981 and is led by President and CEO Jeffrey Casselman.
(Reporting by Andrew Berlin; Editing by Michelle Sierra)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Array Marketing Group