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CD&R to make nearly 4.2x its money with SiteOne IPO

Clayton Dubilier & Rice LLC is poised to more than quadruple its money with the IPO of SiteOne Landscape Supply Inc.

Shares of SiteOne surged 27 percent to close at $26.67 on May 12 on the New York Stock Exchange. SiteOne sold 10 million shares at $21 each on May 11, the midpoint of its price range.

CD&R’s investment in SiteOne dates back to December 2013, when it acquired a majority of the company, previously known as John Deere Landscapes, from Deere & Co. The transaction was valued at $465 million, according to Bloomberg News. CD&R invested $174 million of equity as part of the deal, according to an S-1 regulatory filing.

The New York-based PE firm has already gotten much of that money back. In April, SiteOne paid out a $176 million special cash dividend. CD&R received about $112.4 million of the distribution, while $60.2 million went to Deere, the SEC filing said.

Unlike most PE firms, CD&R is selling shares (6.5 million) in the SiteOne IPO. Its ownership stake of 64 percent will decline to 45 percent, or about 17.8 million shares, if the overallotment option is exercised.

CD&R’s 17.8 million shares are valued at about $474.7 million (at $26.67 a share). In all, CD&R stands to gain $724.1 million. This includes the $474.7 million in paper gains, the $112.4 million dividend and $137 million from the sale of roughly 6.5 million shares.

Now known as SiteOne Landscape Supply,  the Roswell, Georgia-based company is a wholesale distributor of landscaping supplies in the U.S. and Canada. CD&R owned 64 percent of SiteOne before the IPO while Deere & Co had 25 percent of the company, according to a May 2 S-1 filing.

SiteOne’s debt increased with the CD&R buyout. The company did not have any debt before its sale to CD&R. As of Jan. 3, SiteOne’s total debt stood at $358.9 million, the S-1 said. SiteOne sales rose 35 percent to $1.45 billion for the year ended Jan. 3, the filing said.

A spokesman for CD&R declined to comment. SiteOne could not be reached for comment.

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Photo of landscape contractor courtesy of iStock/Helovi