When Access Industries, Chatterjee Group and Chatterjee affiliate Winston Partners LP trumped a bid from Iran’s state-owned National Petrochemical Co. to acquire Basell, it didn’t take long for the conspiracy theorists to create a firestorm linking President George W. Bush’s brother, Marvin Bush, to the deal. It would’ve made for a juicy story, if only it were true.
Marvin Bush’s Winston Partners, though, the McLean Va.-based hedge fund and private equity firm, which has no connections to the Chatterjee Group, was nowhere close to the transaction, and it later turned out to be just a case of mistaken identity.
However, while few of its investments have generated the worldwide buzz of the Basell deal that Winston Partners was not a part of, the firm has been among the more active PE groups in 2005. In the last six months, it has acquired a maker of bathroom partitions (Santana Products) and a salty snacks company (Shearer’s Foods), recapped a sock manufacturer (International Legwear Group) and realized exits on a background services company (Background Information Services) and a licensor of cartoon characters (Logotel).
Meanwhile, earlier this month, Winston Partners teamed up with Meridian Venture Partners for the acquisition of Northern Contours, a manufacturer of decorative laminate and veneer components for the kitchen cabinet, millwork office and store fixture markets.
A Winston Type of Deal
The acquisition of Northern Contours shares a number of traits that Winston Partners seeks out in its portfolio companies. On its Web site, the firm says it targets businesses with a defensible market position, underlying organic growth and scalable operating systems in non-cyclical industries.
Even as it sells into the highly cyclical housing industry, Northern Contours has been able to find a niche within the space that is both non-cyclical and scalable, and it’s the scalability of Northern Contour’s business that gives the company its defensible market position.
Winston Managing Director Douglas Gilbert told Buyouts that since Northern Contours focuses on the renovations market, it is not susceptible to a potential pop in the housing bubble. He described that the company sells its products to both the large OEMs and the much smaller independent contractors, which place orders on a “one-kitchen-at-a-time” basis. Moreover, the diversity of the product line, from office furniture and kitchen cabinets to store fixtures, also serves to separate the company from its competitors. “There’s really nobody out there that’s exactly like these guys,” Gilbert states.
Northern Contours was founded in 1992, and has grown significantly since then. The Fergus Falls, Minn.-based company generates roughly $50 million a year in revenues and according to Gilbert, has seen its revenues grow in the double digits during each of the past few years.
To further grow Northern Contours, Winston will primarily rely on organic growth and will look to target new consumer channels, adding onto its existing cabinet and store fixtures customer base. Winston and Meridian could also look to make add-on acquisitions, although Gilbert noted that such a move was not necessarily central to the investors’ strategy.
The purchase price was not disclosed, although Winston does indicate on its Web site that its typical transaction value generally falls between $10 million and $50 million. J.P. Morgan Chase provided a senior debt facility in the recapitalization, while Gladstone Capital provided a junior tranche. Winston used its $60 million Winston Equity Partners II, LP fund to make the investment, which was raised in 2003. Meridian’s latest fund, meanwhile is the $97.5 million, 2000-vintage Meridian Venture Partners II LP, according to Thomson Venture Economics.