Castle Harlan, CHAMP Complete Sale of United Malt to GrainCorp
NEW YORK,
Castle Harlan and CHAMP sold the company to GrainCorp Ltd. (GNC:AX), a major bulk-grain handler and trader in
The two firms had acquired UMH in
Thus, Castle Harlan said, the total dollar return to the two firms was 4.5 times the equity invested, and the transaction produced an internal rate of return of approximately 80 percent.
David Pittaway, a senior managing director at Castle Harlan and the firm's lead negotiator on the UMH transaction, said that, "all things considered, it really has been a textbook example of how private equity firms and management can work together to add value to the acquired assets."
He noted that since the two firms acquired UMH, the company's earnings before interest, taxes, depreciation and amortization (EBITDA) had grown from
"This was largely a result of steps we and management had taken," Pittaway said, "to significantly enhance the value of these properties."
There were two additional acquisitions, the 40 percent of the U.K. operation that was not part of the original deal, and the purchase of North Country Malt Group, a small distributor of brewing products that strengthened UMH's leading position with microbrewers, Pittaway said.
"But the key thing we did," he noted, "was to make fundamental changes in the business model.
"UMH had been regarded as a commodity grain processor, but we transformed it into a specialty processor of malt, producing malt to the exacting specifications of our customers. As a result, UMH became the number 1 or 2 supplier to breweries in quality ratings, and customers were willing to enter into long-term agreements for exactly fulfilling their needs."
In the
"And we are expanding our production capacity, with a new malt house that has come on line in Scotland that was built for the needs of the distilling industry and another under construction in
"Those are just a few examples of the important steps that were taken to build the value of this enterprise."
UMH's headquarters is in
Castle Harlan, founded in 1987, invests in controlling interests in the buyout and development of middle-market companies in
Castle Harlan's current portfolio companies, which employ more than 42,000 people, include Ames True Temper, a leading manufacturer of lawn and garden tools and accessories; Perkins & Marie Callender's, Inc., which operates and franchises 618 family restaurants in the
CHAMP Private Equity was formed in 2000 by Castle Harlan, Inc., of New York and Australian Mezzanine Investments Ltd. (AMIL) of Sydney. CHAMP and AMIL constitute Australia's longest established private equity investor, and funds advised by them have made some 60 investments since 1987 in companies operating in
CHAMP Funds have made investments in a variety of sectors in companies such as Austar Communications, Bradken Limited and Penrice Limited. Current CHAMP Private Equity investments include International Energy Services, Health Care
For further information: For further information: Charles Storer, +1-212-836-4209
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