After building a strong portfolio of companies in communications, health care, financial services and “transforming businesses,” Whitney & Co. went back to its roots last quarter to invest in a leading brand consumer products company, California SunCare Inc. The firm along with management and minority investor Private Equity Capital Corp. acquired the Los Angeles-based company renaming it California Tan Inc.
The terms of the transaction were not disclosed. However, Paul Vigano, a principal at Whitney said that the deal was financed with a combination of equity from J.H. Whitney IV LP, a minority investment from Private Equity Capital Corp. and management. Additionally, debt was provided by Whitney Mezzanine Fund and a club senior tranche. Stamford, Conn.-based Whitney owns the majority of California Tan, which was advised by Barrington Associates in the transaction.
Vigano said Whitney’s main attraction to the buyout was the company’s established position in the indoor tanning lotion market. “We like backing premier brands in growing industries and we found that California Tan clearly had the best brand recognition in the marketplace and the underlying industry [displayed] dynamics and demographics that were very favorable,” he said. “It’s been growing at a good clip in the last few years and it’s projected to continue to exhibit strong growth.”
California Tan is sold in tanning salons around the world under the brand names California Tan, Emerald Bay, Touch of Bali and Matahari.
Another attractive element of the deal was the management team, said Vigano, which is led by newly appointed Chief Executive Officer Max Recone, the former president of consumer products at Playtex Products Inc. In that position, Recone managed and built up the Banana Boat brand of sun care products.
Additionally, Whitney was attracted to the growth opportunities it saw in California Tan both in the U.S. and overseas. “We have a presence in Europe and some other countries but believe that those countries are three to five years behind the U.S. market,” said Vigano. The firm plans to strengthen California Tan’s U.S. distribution network and the partnerships with those distributors, as well as, to increase training educational programs in the U.S. which should spur higher growth rates, he said. However, Whitney does not intend to significantly change the brand strategy position of distribution network, Vigano said.
With the close of the deal, Whitney gained four of the company’s seven board seats which will be held by Vigano, Richard Stevenson, a vice president at Whitney, Joel Smilow, the former CEO of Playtex, and Ann Iverson, the former CEO of Kay-Bee Toys and Laura Ashley.