Since MidOcean Partners acquired the late-stage DB Capital portfolio last February, the firm has been actively disposing the former Deutsche Bank properties. Most recently, the firm agreed to divest Prestige Brands in a more than $500 million sale to GTCR Golder Rauner. Terms of the deal were not disclosed.
DB Capital first started the consumer product platform, along with co-investors Swander Pace Capital, Peak Capital Holdings and Provender Capital Group, in 1999 with the acquisition of Prell Shampoo from Procter & Gamble Co. Since that original deal, the platform has since added the Comet cleanser, Chloraseptic throat spray and the Clear Eyes and Murine eye-drop brands. The MidOcean-led investment group contributed more than $100 million in equity constructing the platform, which generates annual cash flow of between $50 million and $60 million.
“We had been exploring opportunities to continue building the company,” MidOcean Chief Executive Ted Virtue said, adding that “given the aggressiveness of the buyers,” the best strategy proved to be pursuing a sale of the business.
Virtue would only say MidOcean was able to realize “a very healthy return” from the transaction, but he did note that through acquisitions and organic growth, the investor group was able to grow Prestige from $2 million in cash flow to around $60 million.
“For the most part, these are relatively non-cyclical brands,” he said. “This was a defensive play for us, and we were able to grow the business through consolidation in the industry and driving value on the operations side.”
Meanwhile, for GTCR, the acquisition represents a rather aggressive push into the consumer product space. Just prior to the purchase of Prestige, GTCR worked out a deal to buy The Shansby Group’s Medtech platform, which contains the Cutex nail polish remover, Compound W skincare and Denorex shampoo brands. The deal, occurring roughly a month prior to the Prestige acquisition, was valued at more than $225 million, according to published reports.
The Shansby Group launched MedTech in 1996 through the acquisition of 11 personal-care brands from American Home Products.
And by winning the MedTech auction, GTCR put itself in good position to outbid the field in the Prestige sale. “That deal gave [GTCR] a much broader critical mass on which to implement its strategy,” Virtue said.
In addition to Prestige, MidOcean has also exited control investments in Center Parcs Europe and Center Parcs U.K., as well as minority stakes in class-ring maker Jostens, IT services company Dyncorp, chemicals maker Hundsman International, and American Media Inc. The firm still maintains a hefty portfolio, including stakes in marketing outfit Young America, Jenny Craig, fishing-lure maker Rapala, Madame Toussauds and Jefferson Smurfit.
Additionally, MidOcean has been reported to be contemplating the launch of a new fund, which has been estimated to be in the $800 million range. Virtue, however, could not comment on the fund raising.