Fremont Partners Sells Tapco International Corporation to Headwaters Incorporated.
Tapco is a leading designer, manufacturer, and marketer of accessory products and professional installation tools for the remodeling and new construction of residential exteriors. The Company is located in Wixom, Michigan and is a portfolio company of Fremont Partners II, Fremont Partners III, and a related Fremont Partners co-investment partnership. Fremont Partners II and the co-investment partnership invested $100 million and $50 million, respectively, in Tapco in June 1999 alongside management and the founder's estate, which retained a meaningful stake. As described below Fremont Partners III invested $41.5 million in Tapco in April 2002.
Fremont Partners II is realizing a gross IRR of approximately 22.3% and a cash-on-cash return of approximately 2.5x since June 1999. Fremont Partners III is realizing a gross IRR of 31.8% and a cash-on-cash return of nearly 2x since April 2002. These returns are before any consideration related to tax benefits. With this distribution to date, Fremont Partners has returned $742 million or 124% of invested capital to Fremont Partners II, its 1996 fund, and $225 million or 79% of invested capital to Fremont Partners III, its 2001 fund.
"Today's sale represents an excellent outcome for our investors and is representative of our investment approach: acquire businesses with attractive operating fundamentals and then work in partnership with management to strengthen the strategic and financial position of those businesses through growth strategies and operating improvements," said James T. Farrell, Managing Partner of Fremont Partners. He added, "Tapco's management team is also excited by the opportunity to continue to execute its long term strategic plans with Headwaters, an emerging leader in high growth building products businesses."
Tapco is a typical Fremont Partners' investment: strong partnership with management and value creation from operating initiatives and strategic acquisitions. During Fremont's involvement, Tapco has achieved solid organic revenue growth, improved productivity and margins, and reinvested its free cash flow to strengthen the business, complete several accretive acquisitions, and provide returns to its investors. Tapco's purchase of Vantage Building Products in April 2002 was also financed by a $41.5 million investment from Fremont Partners III.
Since 1999, Tapco's proforma net income and proforma earnings per share have also nearly tripled. Tapco's revenue and EBITDA for the latest 12 months, ending July 31, 2004, were approximately $237 million and $77 million, respectively.
About Fremont Partners
Fremont Partners is a San Francisco-based private equity firm focused solely on investments in middle market companies. Typically, Fremont Partners makes substantial equity investments in operating companies with enterprise values up to $1 billion, looking to deploy a minimum of $75 million in each transaction. Fremont Partners invests across a diverse range of industries, including food and consumer products, healthcare and medical devices, building products, business services, specialty packaging, specialty finance, and industrial manufacturing. Fremont Partners has invested over $1 billion in 18 primary acquisitions, representing a total transaction value of approximately $4 billion.
Following the sale of Tapco, Fremont Partners II, a 1996 fund with $605 million in committed capital, continues to own interests in Juno Lighting, Inc. (Nasdaq:Juno), Kerr Group, Inc., Kinetic Concepts, Inc. (NYSE:KCI), Resun Leasing, Inc. and Software Architects, Inc.
Fremont Partners III, a 2001 fund with $920 million in committed capital continues to own interests in Kerr Group, Inc., Kinetic Concepts, Inc. (NYSE:KCI), Nellson Nutraceutical, Inc. and Specialty Brands, Inc.
About Headwaters Incorporated
Headwaters Incorporated is a world leader in creating value through innovative advancements in the utilization of natural resources. The Company is focused on providing services to energy companies, conversion of fossil fuels into alternative energy products, and adding value to energy. Headwaters generates revenue from managing coal combustion products (CCPs) and from licensing its innovative chemical technology to produce an alternative fuel. Through its CCP business, building products business, and its solid alternative fuels business, the Company earns a growing revenue stream that provides the capital needed to expand and acquire synergistic new business opportunities.
About Tapco International Corporation
Tapco is a leading designer, manufacturer and marketer of building products and professional tools used in exterior residential remodeling and construction. Tapco's products are sold primarily in the United States and Canada, with less than 5% of sales in Europe, Australia and Asia. Tapco distributes its products through substantially all major U.S. vinyl siding distributors in the one-step and two-step channels.
|Printer friendly Cite/link Email Feedback|
|Date:||Sep 8, 2004|
|Previous Article:||Office Depot CEO Cancels Appearance at Goldman Sachs Conference in New York to Deal With Storm Recovery; Office Depot Investor Conference Moved to...|
|Next Article:||IGDC Awarded Contract with Bureau of Land Management.|