New Mountain seeks sale of nation’s largest contact-lens distributor, ABB Optical

New Mountain Capital has put the nation’s largest soft-contact-lens distributor, ABB Optical Group, on the auction block, according to three sources.

Harris Williams is offering financial advice to the sellers, according to two of the sources. William Blair is co-advising on the process, one said.

William Blair knows ABB Optical well, having run the strategic-alternatives process that resulted in Riordan, Lewis & Haden’s sale of the Coral Springs, Florida, optical distributor to New Mountain in November 2012.

Terms of the 2012 recapitalization weren’t disclosed. But $155 million of senior secured credit facilities were used at the time along with an equity contribution to finance the acquisition, ratings firm Moody’s reported at the time.

Founded in 1989 by CEO Angel Alvarez, ABB says it supplies two-thirds of eye- care professionals across the country with brand-name contact lenses, customizable and ophthalmic lenses, as well as frames and other optical products. The company also operates a digital eye lab, which makes gas-permeable and custom soft contact lenses.

ABB generates roughly $1.1 billion in annual revenue, more than double the $503 million posted during the 12 months ended Sept. 30, 2012, Moody’s reports from October 2016 and August 2012 respectively show.

The company generates about $80 million of EBITDA, according to one of the sources.

ABB will almost certainly find a buyer in another financial sponsor and could command a valuation in the $1 billion range, one of the sources said. Firms have continued to show high interest in vision-care companies, offering everything from surgical devices and equipment to distribution services and surgeries for various eye diseases.

TPG in July 2016 bought Beaver-Visitec, a maker of surgical devices for the ophthalmic marketplace, from Roundtable Healthcare PartnersBlue Point Capital in May 2014 recapitalized Hilsinger Co, a distributor of eyewear and eye-care equipment.

While ABB said in February that it reported nearly 8 percent organic contact-lens growth in 2016, the company has also fueled growth through its own M&A efforts.

Perhaps most notable was its $350 million merger with Optical Distributor Group, the nation’s No. 2 contact-lens distributor at the time, announced just months after its recap by New Mountain. William Blair also advised ABB on the January 2013 transaction.

The company in October purchased Diversified Opthalmics. While terms weren’t disclosed, the company amended its senior secured credit facility and increased its term loan B outstanding by $48 million to fund the deal, Moody’s said in its October report.

Moody’s wrote at the time that ABB was deleveraging following a June dividend recap, with expectations its debt-to-EBITDA multiple would rise to about 7.3x from 7.2x for the 12 months ended June 30, 2016.

Representatives of New Mountain and ABB did not immediately return requests for comment. A William Blair spokesperson declined to comment, while a Harris Williams spokeswoman did not return a request for comment.

Action Item: New Mountain investment team:

Luisa Beltran contributed to this report. 

Andrea Justine Aliman, a contestant from the Philippines, adjusts her coloured contact lens before the start of the final night of Miss International Queen 2013 transgender/transsexual beauty pageant in Pattaya on Nov. 1, 2013. Photo courtesy Reuters/Damir Sagolj