Advanta Netherlands Holdings BV
At the time of acquisition, Advanta was the fifth largest agronomic seed company in the world and the largest independent company in the industry with approximately $290 million in revenue.
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The firm was attracted to Advanta's stable diversified revenue stream, leading market share positions in key crop variety in certain geographic regions, leading R&D capabilities and technology positions. Their high EBITDA margins and excellent cash flow generation characteristics were also highly desirable.
Through a focused, proactive agribusiness search, the firm identified Advanta as an attractive target more than two years prior to acquisition. Working under the premise that no other single strategic was likely to or capable of buying the whole business, we partnered with Syngenta, the world's leading agricultural chemical company, to facilitate our acquisition. The firm and Syngenta split control of Advanta's various global business units in a transaction structured to address antitrust and technology licensing issues faced by Syngenta. We invested $75 million to complete the transaction in September 2004.
In addition to growing various core business lines and geographies, the firm undertook a comprehensive legal reorganization of 27 Advanta entities in 17 different countries in order to position them for tax-efficient divestiture. In less than 18 months, the firm realized 4.1x its initial investment through four strategic divestitures.
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Alaska Communications Systems
Alaska Communications Systems, Inc. (“ACS”) is the leading facilities-based telecommunications services provider and the largest local exchange carrier ("LEC") in Alaska and the 13th largest LEC in the United States. ACS provides consumer and business customers with a complete range of telecommunications services.
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In May 1999, after two separate, but concurrent, regulatory approval processes, each lasting approximately nine months, the firm simultaneously completed the acquisition and integration of two local telephone companies (PTI and ATU) in Alaska, forming ACS. The firm, through a number of structural nuances, was able to facilitate a transaction that allowed both the Federal Communications Committee and the local Alaskan regulatory body, the Regulatory Commission of Alaska, to approve the combination of the only two local telephone companies in the area. The investment opportunity in PTI resulted from the firm’s long-term relationship with the management team and its ability to handle a complicated regulatory process and provide certainty of closing.
After completing the acquisition, the firm worked with Alaska Communications Systems to complete several capital markets transactions that increased shareholder value during a period of stable revenue and earnings. First, ACS completed an IPO in 2000 (NASDAQ: ALSK), which generated $140 million of proceeds. Furthermore, in 2003, the firm engineered the spin-out of ACS’ directory business to the Canadian Income Trust market at a premium to the then current trading multiple (9.6x EBITDA versus 7.0x EBITDA). Both of these capital market transactions were used as a source of financing to allow the management to invest in the assets of the business and broaden the Company’s product offering to include a wireless network, which in the long term created substantial shareholder value.
Following the investment in the Company’s assets, the firm recruited a new world class senior management team led by Liane Pelletier as CEO and President. Ms. Pelletier, joined ACS after spending 17 years at Sprint Corporation.
The investments in management and the wireless network provided a differentiated return to shareholders versus other RLEC investments’ during the same time period. The continued investment in the assets of the Company by the firm allowed ACS to reinvigorate growth after a number of years of steady earnings. Subsequent to the renewed growth, in October 2004, the firm determined the best use of capital for shareholders was the institution of a dividend policy that increased the value of the stock by over 100% in less then 12 months. In 2005, the firm recapitalized the debt structure to create interest savings that further increased cash flow available for dividends.
In 2006, the firm made its final exit from the original investment through a secondary sale. The investment’s ROI and IRR substantially outperformed vintage class 1999 telecommunication investments by financial sponsors.
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Seminis Inc.
Seminis is the global market leader in the development, production and marketing of vegetable and fruit seeds in approximately 150 countries.
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Prior to the firm's acquisition, Seminis was owned by several Mexican holding companies controlled by a single shareholder, Mr. Alfonso Romo Garza. Seminis held valuable intellectual property including valuable, proprietary seed technologies and was strategically positioned to experience strong growth. Additionally, Seminis generated attractive EBITDA margins and high returns on capital given its limited capital requirements.
Beginning in 1999, liquidity challenges and credit issues led Mr. Romo Garza to call on the firm. Our acquisition required settlement agreements with more than 100 foreign creditors of Seminis' Mexican holding companies, as well as highly-structured success-based equity securities, and the privatization of Seminis through a long-form merger process. The firm acquired majority control of Seminis in a $606 million transaction that closed in September 2003.
In 2004, the firm executed an add-on high yield debt offering to enhance financial and operating flexibility, and to invest in substantial expansion of research and development facilities. During our 16-month ownership period, Seminis' EBITDA increased from $95 million per annum to $110 million per annum. Seminis was sold to the Monsanto Company in March 2005 for $1.5 billion.
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WireCo World Group
WireCo WorldGroup ("WireCo" or the "Company") is the largest global manufacturer of wire rope and a leading worldwide manufacturer of electromechanical ("EM") cable and highly-engineered cable structures. The Company offers leading brand names under its primary product lines: wire rope, specialty wire and EM cable. WireCo uses advanced metallurgical technology and engineering to convert its primary raw material, high-carbon steel rod, into products which are mission-critical replacement parts used in lifting, pulling and supporting applications for a diverse range of industries, including: mining, oil and gas, commercial construction, telecommunications, marine, electrical, automotive tire and aerospace.
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Paine & Partners acquired WireCo on February 8, 2007 with the following investment thesis:
• Leading market shares
• High margin, consumable products with recurring revenue
• Diverse and growing end markets
• Opportunities to invest in high ROI-generating projects
• World-class management team
Paine & Partners identified several opportunities to transform the Company from the leading supplier of wire rope in North America to the leading global provider of the highest-end wire rope and specialty products.
Since Paine & Partners’ acquistion of WireCo, the firm and management have executed three strategic add-on acquisitions: Wireline Works Inc. (completed on February 26, 2007), a Canadian manufacturer of EM cable, Casar (completed on August 23, 2007), a European manufacturer of high performance wire rope with the premium industry brand, and US Reels (completed on November 13, 2007), a leading U.S. wooden reels supplier. Each of these acquisitions is a significant contributor to WireCo's leading global market position.
In addition, WireCo formed a $100 million joint venture with Wuhan Iron and Steel Group, which is the third largest steel and iron integrated manufacturer in China, to build a state-of-the-art wire rope mill in Wuhan, China. Production at the new facility has begun and output is planned to increase rapidly over the following twelve months.
The three acquisitions and the formation of the China JV have increased WireCo’s global market share in high-end wire rope, and today, WireCo’s manufacturing and distribution footprint spans across four continents. The Company continues to invest in high ROI-generating projects and infrastructure development in order to maintain best-in-class status.
WireCo is a technological leader and is dedicated to innovative product development. The Company has strong research and development capabilities and has increased its full-time staff of product engineers to over 25, all of whom have extensive experience in state-of-the-art metallurgy, rope design, and plastic impregnation.
Since Paine & Partners’ acquisition, the Company successfully moved its corporate headquarters to a new office location in Kansas City, Missouri, in order to improve marketing and recruiting efforts.
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