Kohlberg buys Solo Cup division for $170m

Jerome Kohlberg’s firm has acquired disposable tableware maker Hoffmaster from Solo Cup, a portfolio company of Vestar Capital Partners, in a $170 million transaction

Kohlberg & Co. has agreed to acquire Hoffmaster, a maker of disposable tableware and special occasion consumer products, from Solo Cup Company for $170 million (€123 million).

Hoffmaster: maker
of special occasion
products

Solo Cup is a portfolio company of Vestar Capital Partners, which invested $240 million in the company in 2004 to fund its acquisition of rival company Sweetheart. Solo Cup took on a significant amount of debt at that time, and rising costs compounded its problems.

Solo Cup’s primary motivation for selling the Hoffmaster division is to reduce its overall debt burden, company executives said.

“While the Hoffmaster business is strong, this divestiture allows us to reduce our overall debt burden and increase our focus and investment on improving performance and positioning the Company for growth,” said Solo Cup chief executive officer Robert Korzenski in a statement.

National City Bank and GE Antares have agreed to provide debt financing for the deal, which is expected to close in 45 days. The acquisition will give Kohlberg control of Hoffmaster’s product portfolio, as well as associated manufacturing equipment, two manufacturing facilities in Oshkosh and Appleton, Wisconsin, a leased distribution center in Indianapolis, Indiana, and a sourcing subsidiary in Hong Kong.

Jerome Kohlberg left Kohlberg Kravis Roberts in 1987 to found Kohlberg & Co. The middle market firm has since raised a total of $2.2 billion through five private equity funds. This year it has made investments in automotive wiper manufacturer Trico Products, parking lot operator Central Parking Corporation and pipe and manhole equipment manufacturer Hawkeye Group.