Target: Laundry business of Unilever
Price: $1.4 billion
Sponsor: Vestar Capital Partners
Financial Adviser: Sponsor: JPMorgan, Lehman Brothers; Seller: Morgan Stanley & Co.
Legal Adviser: Sponsor: Kirkland & Ellis LLP ; Seller: Cravath, Swaine & Moore LLP
Vestar Capital plans to merge the former Unilever brands—All, Wisk, Sunlight, Surf and Snuggle—with Huish Detergents Inc., which the firm has owned since April 2007. The combination will be called The Sun Products Corp. and led by Neil DeFeo, former CEO of Playtex Products Inc. Vestar Capital paid Uniliver $1.075 billion in cash and $375 million in preferred shares. Over one-third of the capitalization of the deal is equity.
The New York-based buyout shop closed the deal with the help of mezzanine financing from
The financing for the deal—miniscule compared to the blockbuster deals of 2006 and early 2007—illustrates that it is still difficult for buyout shops to finance deals unless they are uniquely positioned to buy a company, as Vestar Capital was in this case, having owned Huish. “This deal could’ve been done two years ago in a high-yield offering,” Ratzan said. The financing required multiple meetings between the lenders, Vestar Capital and management, and “getting into the details in a way I don’t think lenders did a couple years ago.”
Nonetheless, two to three times as many mezz providers than were needed to finance the deal offered to support it, Ratzan said. “My sense of the market is you can get deals done in a tough market as long as they’re high-quality transactions,” he said. Also alleviating lenders concerns was that the deal is under 5x leveraged, Ratzan said.
Going forward, Vestar Capital is looking to invest in additional marketing and research and development for the brands, Ratzan said. The investment comes out of