Its strategy may be unique, unusual even, but buyout firm Wind Point Partners sees value in its practice of first finding a top caliber CEO to run a company, and then looking to make an acquisition. The latest example: finding executive Rich Dell, and then acquiring U.S. Industries Inc.’s Ames True Temper for $165 million.
Ames True Temper, headquartered in Camp Hill, Pa., is a manufacturer, marketer and distributor of non-motorized lawn and garden tools, wheelbarrows and hose reels. The products are marketed under the Ames True Temper, Jackson and Garant brand names; its major retail customers include Home Depot, Lowe’s and Wal-Mart.
“We always partner with very accomplished executives. Once we find one, we seek out businesses for him or her,” explains Rich Kracum, managing director at Wind Point Partners.
Enter Rich Dell. The former group president of housewares giant Newell Rubbermaid Inc., who was responsible for 11 companies that contributed $2.1 billion in annual sales, is now the chief executive of Ames True Temper. He is in charge of building the $360 million business through acquisitions and organic growth.
“Ames is an ideal investment for Wind Point – a well-positioned middle market company with strong growth prospects that we can pair with a world class CEO, who has the skill set to propel the company to the next level,” Kracum said. He added that Dell spent six months on due diligence with Ames True Temper and has developed a detailed plan to create value.
One of Dell’s plans includes consolidating plants. “Ames and True Temper were merged some time ago, but their facilities were never merged. We will look into doing that,” Dell said.
There is also an opportunity to improve the company’s costs by doing some manufacturing in the Far East. “It will take us several years to implement outsourcing to the Far East and it will only be for a small portion of product lines. We will certainly remain a domestically produced company,” Kracum said.
Chicago-based Wind Point also plans to grow by adding adjacent product lines to its offering and through acquisitions.
While the new product lines may be several years away, one potential new product could be for pruning. “Pruning products are typically placed right next to Ames True Temper products. We could do well in that area. Retailers are happy to deal with less suppliers. To simplify their lives, they might gravitate towards Ames to provide that product,” Kracum said.
Which Way Will The Wind Blow?
Wind Point had competition for the company, but in the end Dell won over U.S. Industries Inc., according to Kracum. “Dell blew them over and enabled us to win the bid,” he noted.
Wind Point bought the company for 5.5 times Ebitda. Additionally, Wind Point put in $60 million in equity. David L. Babson, Northwestern Mutual and Hancock Investments provided $45 million of subordinated debt. The remainder of the $165 million transaction was financed in the form of senior debt, led by FootHill, the Wells Fargo division.
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