Sep 7 2005
Castle Harlan, Inc., a New York- based private equity investment firm, announced today its investment fund, Castle Harlan Partners IV L.P. (CHPIV), has acquired the Polypipe Group, a leading supplier of plastic pipe systems in the United Kingdom and Ireland. The transaction was valued at 293 million pounds Sterling (approximately $527 million).
The company is based in Doncaster, South Yorkshire, U.K, and has approximately 2,900 employees in 39 main facilities, most of them in the U.K. The company also serves niche segments of the plastic pipe and fittings markets in Germany and France.
Polypipe was a subsidiary of IMI plc, an international engineering company traded on the London Stock Exchange that is focused on fluid controls and retail dispense markets around the world.
For the 12 months ended last June 30, Polypipe's unaudited results were revenues of 314.6 million pounds ($566.3 million) and EBITDA (earnings before interest, taxes, depreciation and amortization) of 45.6 million pounds ($82.1 million). Sales in the U.K. account for more than 70 percent of revenues.
"Polypipe has a strong business, with a reliable record of revenues, profits and cash generation," said Howard D. Morgan, a senior managing director at Castle Harlan, who led the firm's Polypipe project team. "The company enjoys a reputation for high quality, strong brand recognition and brand loyalty. It has a powerful and sustainable position with independent suppliers, as well as good relations with many of the major merchants and builders. Polypipe has an effective management team, with many years of experience in plastic pipe systems and building products.
"There are significant opportunities for growth at Polypipe through greater focus on core businesses, more coordination between business units and new products, including products from China and other low cost sources. There is also growth opportunity in Polypipe's European markets and measured entry into new markets, as well as possible complementary acquisitions."
Morgan said that David G. Hall had rejoined Polypipe as its new chief executive officer at closing. Mr. Hall has decades of experience working in the plastic pipes business and working with private equity owned businesses. No other management changes are currently planned at Polypipe. Mr. Hall and other members of the management team intend to invest alongside CHPIV and have personal equity interests in the company.
John E. Morningstar, a Castle Harlan vice president who was also closely involved in the deal, added: "Despite softer current trading markets in the U.K. and higher raw material and energy costs, Polypipe has been resilient and remains well positioned. Castle Harlan is confident that Polypipe will continue its excellent growth, as it benefits from the long-term trend of substituting plastic pipe systems for aging copper, clay and concrete pipes in a wide range of residential, commercial and civil-engineering applications, including storm-water management and large-diameter sewage systems."
Castle Harlan, founded in 1987, invests in controlling interests in the buyout and development of middle-market companies in North America and Europe. Its team of nine managing directors, including its founders, has completed 45 acquisitions with a total value in excess of $7 billion. The firm traces its roots to the start of the institutionalized private-equity business in the late 1960s.
Castle Harlan also invests in Australia, New Zealand and the Australasian region through its Sydney-based affiliate, CHAMP Private Equity, which is one of Australia's oldest and largest private equity firms.
Castle Harlan's portfolio companies, which employ more than 31,000 people, include Ames True Temper, a leading manufacturer of lawn and garden tools and accessories; Horizon Lines, one of the largest U.S. container shipping companies; and Caribbean Restaurants Inc., which operates the exclusive Burger King franchise in Puerto Rico with 165 units.
Castle Harlan received acquisition advice on the Polypipe transaction from Brown Gibbons Lang of Chicago and Cleveland and Livingstone Guarantee of London. Deutsche Bank lead the acquisition financing and provided M & A structuring advice for the transaction, and GE Capital provided a 35 million pounds working capital facility.
http://www.castleharlan.com/