No Nicks in Remington Exit –

After a seven-year stay in Vestar Capital Partners’ cabinet, electric razor maker Remington Products will be sold to Rayovac Corp. in a deal worth roughly $322 million including debt. The transaction is expected to close within the next two months.

“Rayovac approached us about a deal. We were seven-plus years into the investment, in a fund that is in its 11th year, so we felt it was a good time to sell,” Vestar Managing Director Norman Alpert said. “In the consumer products arena, scale is very important, and we believed Remington needed to be part of a larger company to compete in its market.” Indeed, Remington rivals Braun and Norelco sit under the Gillette Co. and Royal Philips Electronics umbrellas, respectively, two giants in the consumer product sector.

Vestar originally invested in the company in 1996, contributing $33 million of equity in a $226 million recapitalization for a controlling stake in the business. The firm acquired Remington from the Isaac Perlmutter-run Remsen Partners and RPI Corp., which at the time was headed by the late Victor Kiam II, the spokesman in the Remington commercials who popularized the slogan, “I like the shaver so much, I bought the company.”

The Remington name has been around since the 1840s and the company first introduced electric shavers in the 1930s. Today, Remington sells an assortment of razors and other grooming products throughout the world, and in 2002 generated sales of $365 million.

The sale of Remington follows a turnaround for the company, which had enjoyed steady growth in the 80s, but encountered some stumbling blocks in the following decade.

“We felt the product line was tired, but knew that a brand with a legacy as strong as Remington could be resuscitated,” Alpert said. “Through the investment, we outsourced the manufacturing and distribution functions and reinvested the money in product development and advertising. This caused the top line growth, and the margins started to grow dramatically as well.” Vestar also shook up the management team at Remington, installing Neil DeFeo as CEO, who came to the company from Clorox Company.

However, even during Vestar’s investment, things weren’t always smooth shaving for Remington. Alpert said, “There were definitely some tough years, and that helped contribute to the longer holding period.” But once the company was able to digest the capital investments Vestar made, Remington started to show improvement.

During the seven-year investment, Remington saw its revenue grow from around $250 million in 1996 to $360.3 million in 2003, while EBITDA hit a depth of $18 million and is starting to approach $50 million today, according to Alpert.

Vestar would not give exact figures as to its IRR from the Remington investment, although Alpert identified it is “in the double digits,” adding, “It’s a material contributor to our 1992-vintage Vestar II fund, which currently has an 80% growth IRR and has returned over 4.5 times invested capital.”

From the Vestar II fund, which officially closed in 1993 with $260 million of capital, the firm still holds investments in Aearo Corp., a maker of personal protection equipment, and Red Prairie, a logistics software business, among other holdings.