PE Group buys stake in BWAY/Mauser from Stone Canyon

Stone Canyon Industries, which has ties to Michael Milken, sold a minority stake in SCI PH Inc, parent of BWAY and Mauser, to a group of PE firms.

Stone Canyon, Los Angeles, said Dec. 27 that it recapped SCI and issued $850 million in stock to new investors Ontario Teachers’ Pension Plan, Canyon Capital Advisors, Public Sector Pension Investment Board and Arcadia Investment Partners. The group will own a minority of SCI, a statement said.

Proceeds of the $850 million stock issuance will be used for general purposes, including paying out a distribution to existing equity holders. The size of the distribution is unclear.

The sale comes a little more than a year since Stone Canyon closed its $2.4 billion buy of BWAY in August 2016. BWAY, Atlanta, makes rigid metal and plastic containers used to package industrial, bulk, food and retail goods. In April 2017 Stone Canyon then bought Mauser Group NV, a provider of rigid packaging products, from Clayton, Dubilier & Rice for $2.3 billion.

The minority stake sale marks a return to PE ownership for both BWAY and Mauser. Platinum Equity sold the company to Stone Canyon in 2016. Platinum bought BWAY from Madison Dearborn Partners in late 2012 for $1.24 billion.

Stone Canyon is an industrial holding company with more than $3 billion of consolidated revenue. The firm has ties to Milken, the former “junk-bond king,” who is a passive shareholder, said Seth Lubove, a Stone Canyon spokesman.

In fact, many of Stone Canyon’s executives, including Co-CEO Adam Cohn and President Michael Neumann, were part of Knowledge Universe, which Milken co-founded. In 2015, Partners Group acquired Knowledge Universe’s early childhood education services business. The deal was valued at $1.5 billion.

Stone Canyon and the Milken Institute also shared the same address in Santa Monica. (Stone Canyon has moved since Forbes reported in February that both firms were located on 1250 Fourth St.)

Canyon Capital, which is part of the investor group buying a stake in SCI, also has ties to Milken. Mitchell Julis and Josh Friedman, co-founders and co-CIOs of Canyon Capital, were part of Drexel Burnham Lambert. Milken, in the 1980s, headed up the high-yield-bond department at Drexel. He is credited with creating the junk-bond marke, which fueled many corporate takeovers. Milken was found guilty of racketeering and securities fraud in 1989.

Executives for OTPP, PSP and Milken declined comment. Canyon Capital and Arcadia could not be reached for comment. BWAY referred questions to Lubove.

Action Item: Contact Adam Cohn, co-CEO of Stone Canyon, at +1 424-316-2061

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