Ares, OTPP buy building products business

The US firm and the Canadian pension system will hold an equal stake in Pennsylvania-based CPG, trumping rivals in an auction that had reportedly drawn interest from Warburg Pincus, Berkshire Partners and TPG.

Ares Management and Ontario Teachers' Pension Plan have acquired CPG International, a US construction products maker, from New York-headquartered AEA Investors.

No financial details were disclosed for the transaction, but reports by Reuters have suggested the sale could value the company at up to $1.5 billion. The deal remains subject to regulatory approval.

Headquartered in Scranton, Pennsylvania, CPG makes low-maintenance building products to substitute wood, metal and other material in residential, commercial and industrial applications. Its products are sold under a variety of brands including AZEK, Scranton Products and VYCOM.

The company was bought by AEA from buyout groups Whitney & Co and Clearview Capital for $380 million in May 2005, when it generated around $220 million in sales. The group has made five bolt-on acquisitions since then, including the $320 million purchase of decking and fencing material manufacturer TimberTech last year. It now claims to be the largest US provider of low-maintenance exterior building supplies, and posted $500 million in sales in 2012.

The deal marks the end of a competitive auction process led by Barclays and Deutsche Bank earlier this year, which had reportedly attracted interest from a handful of private equity firms. In addition to Ares, these were thought to include Warburg Pincus, Berkshire Partners and TPG.

This came after CPG filed for an IPO in 2011. The eventual decision to seek a private sale rather than a public listing came amid renewed worries over the health of America’s residential market, with stocks of a number of large construction companies logging disappointing performance since the second quarter.

This has extended to private equity-backed companies, with shares in Taylor Morrison Home, a home builder listed on NASDAQ by TPG and Oaktree Capital Management in April, which was trading 5 percent below its IPO price on Monday.

OTPP, Warburg Pincus, and TPG did not respond to requests for comment before press time. AEA, Ares and Berkshire Partners declined to comment.