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HGGC, Charlesbank to sell Citadel Plastics for $800 mln

  • Sponsors grew company’s EBITDA 67 pct in three years
  • Citadel is being sold for 10.6x EBITDA
  • HGGC owns 60 pct of company

All told, HGGC and Charlesbank Capital said they’re selling Citadel Plastics at 10.6x EBITDA, a fatter multiple than when the West Chicago, Ill-based materials maker was acquired three years ago.

At the time of its acquisition in 2012, Citadel had annual revenue of $310 million and about $45 million in EBTIDA. Its yearly revenue has grown to $525 million and EBITDA to $75 million.

HGGC held about 60 percent of Citadel Plastics as the lead investor in the deal. Charlesbank held a stake of about 40 percent, plus management held equity options that came out of shares held by the two larger owners.

Gary Crittenden, chairman of HGGC, said the firm worked to beef up Citadel’s offerings on more profitable businesses, such as engineered products. “This had a positive impact on the sale-price multiple,” he said. Citadel CEO Mike Huff deserves credit for building up the company quickly both through organic growth and acquisitions, Crittenden said.

Citadel purchased Lucent Polymers in 2013 and The Composites Group in 2014, boosting its customer base.

The sale of Citadel represents the seventh exit from HGGC’s $1.1 billion inaugural fund. HGGC closed Fund II in March with $1.33 billion in commitments.

Once the Citadel deal closes, HGGC’s Fund I will hold four portfolio companies: MyWebGrocer, Innovative, IQor and MaMa Rosa’s.

Photo courtesy of ©iStock/hjalmeida