Kohlberg said to win auction for Mason Wells’ Nelipak

  • Valuation suggests ~15x Ebitda multiple
  • Recurring revenue, customer stickiness and healthcare component contributed to big price tag
  • Sell-side adviser: Lincoln International

Kohlberg & Co prevailed in the sales process for Mason WellsNelipak Healthcare Packaging, the highly sought after provider of healthcare thermoformed packaging, four sources told Buyouts.

The anticipated transaction is valued at approximately $590 million, two of the sources said. A third said the company was expected to trade within the $575 million to $600 million range.

Based upon the target’s approximately $40 million in estimated 2019 Ebitda, that suggests an Ebitda multiple of around 15x, which would make it among the highest sponsor deal multiples in the broader universe of packaging, two of the sources said.

The deal would mark the conclusion of a Lincoln International-run sales process that kicked off earlier this year. Sources in late March predicted Nelipak would fetch a 10x to 13x Ebitda multiple, Buyouts reported.

Nelipak, of Cranston, Rhode Island, provides custom-designed, thermoformed packaging products and services for the medical device and pharmaceutical industries. Products include medical-device trays, procedure trays, pharmaceutical packaging, handling trays and sealing machines.

Sources previously identified logical strategic buyers as Steris plc, Berwind Group’s Oliver Products and Genstar Capital-backed Tekni-Plex. The asset was also deemed a highly attractive private equity target.

Unlike commoditized healthcare packaging, the level of technology and design engineering that goes into thermoformed packaging creates a tremendous level of customer loyalty, one source said. Nelipak serves as an important piece of the value chain, with an attractive recurring revenue model not unlike contract manufacturing.

With a global presence spanning Europe, North America and Latin America, Nelipak is also interesting in that it is among the only pure play healthcare packaging companies of scale, the source noted.

Nelipak’s biggest competitor is Prent Thermoforming of Janesville, Wisconsin, the source said. Prent is a family-owned provider of custom thermoforming that serves not only medical companies, but also the electronics and consumer markets.

Mason Wells, a Midwestern-focused PE shop, invested in Nelipak in December 2013.

The firm, investing out of its third fund, formed the company by carving out Sealed Air’s rigid medical packaging business. Sealed Air expected to receive $125 million through the sale, a statement said at the time.

With Mason Wells’ backing, Nelipak purchased Phoenix’s Flexpak Corp, Puerto Rico’s Tegrant Alloyd Brands and, most recently, Whitehall, Pennsylvania’s Computer Designs.

Kohlberg typically writes $100 million to $500 million equity checks, investing in companies with $200 million to $1.5 billion enterprise values.

The Mount Kisco, New York-based firm’s portfolio of healthcare-related assets includes Meadows Behavioral Healthcare, SpecialtyCare and Spinal Elements.

Representatives of Mason Wells and Kohlberg declined to comment. Nelipak and Lincoln couldn’t immediately be reached.

Action Item: See Kohlberg & Co’s latest Form ADV: https://bit.ly/2WFwA0f