Private equity firm Leonard Green & Partners LP is exploring a sale of Pro Mach Group Inc, in a deal that could value the U.S. packaging company at around $5 billion, according to people familiar with the matter.
Leonard Green is working with investment bank Goldman Sachs Group Inc on an auction for Pro Mach, which has attracted interest from other buyout firms, the sources said.
Leonard Green is also considering the sale of a minority stake in Pro Mach as an alternative to an outright sale, one of the sources said. That would preserve Pro Mach‘s debt structure and would not require bidders to secure leveraged buyout financing, the source added.
About 70% of Pro Mach‘s floating-rate debt is hedged for multiple years, shielding it from rising interest rates, according to credit ratings agency Moody’s Investors Service Inc.
Leonard Green is expecting to command a valuation for Pro Mach equivalent to 15 times the company’s 12-month earnings before interest, taxes, depreciation and amortization of about $350 million from potential buyers, according to the same source.
The sources requested anonymity because the matter is confidential. Leonard Green and Pro Mach did not immediately respond to requests for comment. Goldman Sachs declined to comment.
Based in Covington, Kentucky, Pro Mach operates more than 40 packaging brands, including bottle-capping machinery, labeling equipment, and end-of-line packaging for the food, pharmaceutical and other manufacturing industries.
Leonard Green bought Pro Mach from buyout firm AEA Investors LP for about $2.2 billion, including debt, in 2018.
Moody’s said in December that Pro Mach‘s order book indicated “healthy demand” for its products despite concerns of slowing economic growth.
Reuters
