GSO Capital Partners has entered into an agreement to acquire Reddy Ice Holdings, the largest manufacturer and distributor of packaged ice in the US, for $1.1 billion (€807 million). GSO will take Reddy Ice private by paying its shareholders $31.25 per share in cash, approximately a 9.6 percent premium over Reddy Ice’s closing share price of $28.52 on 29 June.
Dallas-based Reddy Ice sells its products to 82,000 locations in 31 states and the District of Columbia. Concurrent with the acquisition announcement, Reddy Ice revised downward its earnings expectations for 2007 in response to “sustained abnormally adverse weather during the second quarter in several of the company’s major markets”, according to a statement. Revenues for 2007 are now expected to range between $350 million and $360 million, rather than $360 million to $370 million.
GSO is a New York-based asset manager with approximately $8 billion in assets under management. It was founded in 2005 by three ex-Credit Suisse bankers: CS’ former global head of leverage finance Bennett Goodman, CS’ former head of high-yield bonds Tripp Smith, and CS’ former head of high-yield sales Doug Ostrover. In May of this year Merrill Lynch acquired a 20 percent stake in the firm.
Since its inception, the firm has made acquisitions in a wide range of industries. GSO acquired Flex Group, a German hand-held power tools manufacturer, from Black & Decker for an undisclosed amount. This April GSO sold Flex to AXA Private Equity, also for an undisclosed amount. In May of 2006, GSO and Coldwater Financial bought the thermal processing division of Gibraltar Industries for $135 million in cash. Later that year, the firm was part of a consortium that bought Reader’s Digest, the New York magazine publisher, for $2.4 billion.