KPS nets 5x on Anchor Glass sale to CVC and BA Glass

KPS is selling the North American glass manufacturer for over $1bn after a 2.5-year holding period.

CVC Capital Partners, along with European glass container manufacturer BA Glass, has agreed to acquire glass packaging provider Anchor Glass Container Corporation for over $1 billion from mid-market firm KPS Capital Partners.

According to a source familiar with the matter, KPS is realising a 5x money-on-money multiple from this sale after a two-and-a-half-year holding period. KPS initially acquired Anchor Glass in June 2014 for $435 million, according to the source, although the firm declined to comment on the purchase price, and an internal rate of return metric was not available.

The source added that KPS had originally worked with Anchor Glass when it was purchasing Anchor Glass's glass packaging products for a brewery portfolio company. During KPS’s ownership, Anchor Glass’s EBITDA increased by almost 60 percent in two years, according to the source.

Anchor Glass, based in Tampa, Florida, serves companies in the beer, liquor, food, beverage and ready-to-drink markets. It runs six manufacturing facilities in Florida, Georgia, Indiana, Minnesota, New York and Oklahoma, engineering and spare parts facility in Illinois and a mould design and manufacturing facility in Ohio, according to a statement from CVC.

Through 11 furnaces and 31 machines, Anchor Glass produces nearly 5 billion glass containers per annum and employs about 2,000 people.

Anchor Glass chief executive Jim Fredlake said BA Glass’s industry expertise and CVC’s global network will bolster the company as it enters the next phase of development.

CVC is investing out of CVC European Equity Partners Fund VI, which closed in 2013 on €10.9 billion, above its €9 billion target, for this deal, according to a source familiar with the matter.

According to PEI data, it is currently investing several funds, including two that closed earlier this year. The firm closed CVC Growth Partners on $1 billion, above its $750 million target, and CVC Strategic Opportunities on $4.46 billion, according to PEI data.

The firm, which manages $33 billion in assets, is also gearing up to launch a €12.5 billion buyout fund in the first half of 2017, as reported by Private Equity International.

It is partnering with BA Glass, a Portugal-based glass packaging company that marked €531 million in revenue and €173 million in EBITDA in 2015. It operates eight glass manufacturing plants in Portugal, Spain, Poland and Germany, and employs 2,400 people, according to the CVC statement.

The transaction is expected to close in the fourth quarter of 2016.

KPS manages about $5.5 billion in assets and focuses on turnaround, distressed and other special situations in the North American manufacturing sector. It typically invests between $200 million and $250 million, with a capacity to reach $450 million per deal, according to PEI data.

In the year before the Anchor Glass acquisition, KPS had closed KPS Special Situations Fund IV on $3.57 billion, above its $3 billion target, according to PEI data.

Morgan Stanley and Citigroup provided financial advising to CVC and BA Glass. Baker & McKenzie was their legal counsel. Credit Suisse, Citigroup and Morgan Stanley provided debt financing to the two buyers.

KPS and Anchor Glass received financial advising from Credit Suisse and JPMorgan, and legal advising from Paul, Weiss, Rifkind, Wharton & Garrison.

Spokesmen for CVC and KPS declined to comment.