ICV Boxes In Packaging Deal –

With an eye on the pharmaceutical patents scheduled to expire in the coming years, ICV Capital Partners acquired Innovative Folding Carton Co., a provider of custom packaging to the generic and over-the-counter drug industries. Terms of the transaction, which closed in May, were not disclosed. Impaxx, a portfolio company of Aurora Capital Group, was the seller.

The investment, for ICV, fits snug in with its focus on finding corporate orphans. “Innovative was owned by a corporate parent whose objectives were not aligned with those of the company,” ICV Managing Director Willie Woods said. “This deal is very similar to what we did in our acquisition of AAMP of America. We like to buy non-strategic subsidiaries to free them up from their corporate parents and provide them with the resources and focus to pursue their own objectives.”

To buy Innovative, ICV teamed up with Dallas-based 21st Century Group, and company management contributed to the equity component as well. PNC Business Credit supplied a revolving credit facility and senior debt to support the deal.

The partnership of ICV and 21st Century Group represents a reunion of sorts for Woods, who attended Morehouse College with 21st Century Group Principal Kelvin Walker.

The pairing also serves to align ICV with an investing partner that has experience in the packaging space. 21st Century Group, in March of this year, acquired Paris Packaging, which manufactures cartons and paper products in the fast food niche.

Further bolstering the investment group’s packaging savvy, Albert D. Fuller, a founder of Integrated Packaging Corp., will contribute to the investment and serve as an independent member on Innovative’s board.

While Woods could not disclose the enterprise value assigned to Innovative through the sale, he did say the purchase gave the company a five- to 6x EBITDA valuation and fit within the firm’s typical purchase-price range of $30 million to $50 million. ICV used its $130.5 million ICV Partners Fund, which is approximately 65% invested, according to Woods. 21st Century, meanwhile, manages roughly $80 million of capital.

The primary thesis behind the investment rests with the expectation for a flood of new drugs to come off of their patents in the coming years. “Innovative’s niche is in the OTC generic cartons, as well as the neutraceutical and cosmetic markets,” Woods said. “They’re a short-run, quick, turnaround type of business and they’re very service oriented.”

Woods also anticipates that being unchained from Impaxx will help Innovative better attack its markets. “There was no real focus on their customers under Impaxx. Freeing up Innovative should really help them improve their sales strategy and really focus on the customer segments that match up best with their products,” he said.

Additionally, ICV expects to be opportunistic in the pursuit of add-on acquisitions, and the firm will look to fill in the company’s markets in the Southeast and in California.

In 2003, Innovative reported revenues of more than $37 million. If all goes according to the buying group’s blueprint, Woods sees the company doubling that number over the next five years, primarily through organic growth.


Buyer: ICV Capital Partners, 21st Century Group

Target: Innovative Folding Carton Co.

Purchase Price: Undisclosed

Seller: Impaxx Inc.

Advisor: Impaxx: Barrington Associates

Legal Counsel: ICV: Kirkland & Ellis

Accountant: ICV: Ernst & Young