Hellman & Friedman in $1.3bn manufacturing deal

The San Francisco-based firm is investing from its sixth fund, which closed on $8.4bn in 2007. The firm has not yet dipped into its $8.8bn seventh fund, closed last year.

Hellman & Friedman has signed an agreement to acquire Associated Materials, a manufacturer of exterior residential building products, for $1.3 billion.

Majority owners Investcorp and Harvest Partners will make a full exit from the company. The transaction is expected to close in the fourth quarter of 2010.

Associated Materials produces a range of products including vinyl windows, vinyl siding, aluminum and steel siding and accessories. The deal marks the second investment by Hellman in the building products sector after acquiring heating and air conditioning equipment maker Goodman Global in 2008 for approximately $2.7 billion.

“We actually like the building products space a lot,” Hellman & Friedman managing director Erik Ragatz told PEO. “We're certainly looking for other opportunities there.”

San Francisco-based Hellman is investing in Associated Materials from its sixth fund, which closed on $8.4 billion in 2007. The firm’s seventh fund, Hellman & Friedman Capital Partners VII, closed on $8.8 billion in October 2009, but has yet to be activated, as Fund VI is still in the process of making investments.

Financing for the purchase by Hellman & Friedman came from Deutsche Bank Securities and UBS Investment Bank. UBS is acting as a financial advisor to Hellman & Friedman and Simpson Thacher & Bartlett is acting as legal advisor.

Harvest Partners originally acquired Associated Materials in a $436 million public-to-private transaction in 2002. In 2005, Investcorp purchased $150 million of convertible preferred stock in the company from Harvest.

In July, Hellman, TPG and JMI Equity sold Intergraph, a maker of engineering and geospatial software, for $2.1 billion to Swedish technology company Hexagon. A source close to the deal said the return for the private equity firms as a whole would equate to a multiple of more than four times the investment. Hellman, TPG and JMI acquired Intergraph in 2006 in a transaction valued at roughly $1.3 billion.

Hellman & Friedman invests in industries including energy and industrials, software, business and marketing services, internet and digital media, financial services, insurance, media and healthcare.