Castle Harlan agreed to exit its American Achievement Corp. (AAC) class ring platform, selling the company to Fenway Partners in a deal valued at $416 million. Terms of the deal were not disclosed.
American Achievement is a manufacturer and distributor of class rings and yearbooks, as well as other related products. The platform was first established through Castle Harlan’s acquisitions of CJC Holdings’ ArtCarved class ring division and Town and Country Corp.’s L.G. Balfour unit. Together, the two deals were valued at $130.6 million, including fees, and made the combined company the No. 2 player in the class ring market behind Jostens Inc.
When the deal was first announced in 1996, it ran into some Federal Trade Commission static, and Town and Country’s Gold Lance unit was eventually pruned from the original acquisition and later sold to Jostens Inc. “Artcarved was strong on the retail side while Balfour dominated the school-direct channel,” said David Pittaway, a senior managing director at Castle Harlan. “And at the time of the acquisition, the FTC was concerned about the channels of distribution.”
However, that hurdle did not keep AAC from making other acquisitions. Among the add-ons Castle Harlan pursued were AAC’s purchases of yearbook manufacturer and distributor Taylor Publishing and Who’s Who publisher Educational Communications, in addition to other deals.
The firm also instituted a number of initiatives designed to spur organic growth and take advantage of synergies in the companies acquired. Castle Harlan’s first move was to consolidate the Balfour and ArtCarved businesses, moving Balfour’s operations from Attleboro, Mass., to ArtCarved’s Texas location.
Castle Harlan was also active in pushing new products and technologies. “We were able to really push the curve in the color press technology at our yearbook division, allowing us to take a leap over our competitors in that area, and we also had the foresight to develop new silver platinum alloy rings, which have been very well received,” Pittaway said.
The Balfour unit is perhaps best known for its championship rings, worn by past professional teams such as the New York Yankees, Boston Celtics, and the 1980 Gold Medal Winning USA Olympic Hockey Team.
The company’s bread and butter, though, are its class rings and yearbook divisions, which target the scholastic market, a space that has been on the radar of many private equity firms of late. Among the most notable deals in the sector recently, DLJ Merchant Banking Partners acquired AAC rival Jostens Inc. in a $1.2 billion deal, while Leonard Green & Partners paid $130.9 million for cheerleader company Varsity Brands and Linsalata Capital purchased letterman jacket and school award supplier Neff Motivation.
Fenway Partners CEO and Chairman Peter Lamm cited the sector’s strength as one of the main drivers to why the firm pursued this deal. “The fundamentals of the scholastic products industry continue to be strong, and AAC maintains a leading market position in the majority of its product lines,” he said.
Meanwhile in selling the company, Pittaway noted that after six years, the exit of AAC was primarily spurred by the natural lifecycle of a Castle Harlan portfolio company, and added, “The Jostens sale also gave us a clearer view of the market place for this kind of asset.” Pittaway would not comment on what kind of return Castle Harlan will realize from the transaction. However, The Deal is reporting that the firm is in line to receive over $170 million in cash proceeds from the sale, and Pittaway said Castle Harlan was able to return some money back to its LPs through AAC’s 2002 refinancing arrangement. Equity for the investment came out of Castle Harlan’s $275 million Castle Harlan Partners II fund.
Buyer: Fenway Partners
Target: American Achievement Corp.
Seller: Castle Harlan
Advisors: CH: Deutsche Bank AG and Lane Berry & Co.
Lawyers: CH: Schulte, Roth, Zabel LLP; FP: Ropes & Gray
Debt Providers: FP: Goldman Sachs and Deutsche Bank
Accountant: CH: Deloitte & Touche