All that dry powder is driving up multiples for industrial deals. Before the go-go days of 2006, industrial firms were selling for 6.5x to 7.5x EBITDA. The credit-fueled buyout craze then caused multiples to surge to 8.5x to 9.5x EBITDA for industrial companies that were worth only 7x, before the credit crunch made multiples irrelevant (no deals, no multiples). Today, PE firms are back shopping for deals and industrial companies are selling for inflated multiples, roughly 8.5x to 9.5x EBITDA, an East Coast private equity pro told me earlier today.
The credit markets may have uncrunched, but banks remain nervous about going it alone on private equity transactions. One lender I spoke today he was called by two very large sponsors who were in final rounds for a $190 million deal that required $100 million in debt financing. “I wanted to bring on more partners but the sponsors wanted someone to take a very large hold size and make sure the deal gets done,” the banker said. It wasn’t clear whether the lender won that deal but the situation is clear: Private equity firms view bank clubs as risky. “When you have 10 guys in your syndicate all wanting to make sure they get what they need, it makes it tough to pull the deal together,” one private equity executive explained.
Late last year, The Carlyle Group signed a 35-year public/private partnership with the State of Connecticut, whereby the firm agreed to redevelop, operate and maintain the state’s 23 highway service areas. Among the improvements, Carlyle said that it would supplement the McDonald’s drive-thrus at the I-95 rest stops with Subway and Dunkin’ Donuts drive-thrus (Subway’s parent company was a partner on the deal). This transaction was a landmark for public-private partnerships in the U.S., which has lagged behind other industiralized nations in putting investment shops like Carlyle in operational control of its toll roads, bridges, ports, etc. For those of us who drive regularly between Boston and New York City, however, it was about finally having some better food options (and, hopefully, cleaner facilities). Our collective arteries applauded the news.
Irving Place Capital has agreed to acquire Mold-Rite Plastics Inc., a Plattsburgh, NY.-based maker of caps and jars for the drug, nutraceuticals and personal care markets. No financial terms were disclosed for the deal, which is expected to close within the next 60 days. Phil Yates, former CEO of Graham Packaging and an Irving Place senior advisor, will join Mold-Rite as executive chairman.
(Reuters) – Private equity firm Providence Equity Partners is the frontrunner to acquire university programme provider Study Group with final bids due this week, two people familiar with the matter said Wednesday. The company, which media reports say is worth up to A$600 million ($523.6 million), is being sold by Australian private equity firm CHAMP […]
FRANKFURT (Reuters) – Chemical industry leader BASF (BASF.DE) said it had agreed to buy Cognis for 700 million euros ($939.2 million) and expects the household products additives maker to help it weather economic turbulence. BASF will pay smaller peer Cognis’s private-equity owners Permira [PERM.UL] and Goldman Sachs Capital Partners (GS.N) 3.1 billion euros including debt, […]
The auction of Modern Luxury Media, a publisher of magazines focused on lavish lifestyles, has reached its second round, peHUB has learned. Bidders have ncluded a raft of private equity shops -- we've heard up to 10 firms expressed interest -- and some strategics. Michael Kong, Modern Luxury's founder and ex-CEO, also is trying to get a proposal in place, but is not viewed as a leading bidder. It’s unclear what Modern Luxury can fetch. Berkery Noyes is running the auction. “There was a lot more interest in the business than was anticipated,” a source said.
Saw Mill Capital Partners has acquired Gateway Packaging, a Granite City, Ill.-based provider of flexible packaging for the pet food and human food markets. No financial terms were disclosed.
(Reuters) – IT security company SonicWall Inc (SNWL.O) said in a filing it had been approached by a privately held company to be acquired for $12 a share, trumping an earlier offer from private equity firm Thoma Bravo. Earlier this month, the New York-based private equity firm had offered to acquire the company for $11.50 […]
DLJ Merchant Banking Partners is prepping portfolio company Total Safety U.S. for a sale, multiple sources tell peHUB. Before continuing, it is important to note that those sources do not include either DLJMB or Total Safety CEO David Fanta, who strenuously denied sale plans. "We're owned by private equity, so obviously there will a deal at some point," Fanta said. "But it's not happening right now." So we have a case of "they said, they said." Pretty typical, although on-the-record denials about such things are fairly unusual (we considered spiking the story, but then got independent confirmation from an additional source).