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by David Carey
PRIVATE EQUITY Odyssey Investment Partners LLC is buying Norcross Safety Products LLC in a secondary buyout valuing the Oak Brook, Ill.-based goggle and glove maker at $495 million, including debt.
The agreement caps a sale process that got under way in early 2004, when Norcross hired Credit Suisse First Boston to shop the company. That summer Norcross aborted the effort after Bear Stearns Merchant Banking, the top candidate to buy it, backed away, sources have said.
Norcross didn’t give up. In late December it began talks with odyssey, a New York private equity house. The ensuing deal’s price equates to a fairly rich multiple of about 7.5 times trailing 12-month Ebitda.
The sellers, an investment group led by John Hancock Life Insurance Co.’s private equity arm and including Trimaran Capital Partners and CIVC Partners, did not return messages seeking comment.
Financial filings suggest they will nearly triple their $97 million investment in a combination of Norcross preferred and common stock. Their profit includes about $50 million in preferred dividends awarded in January.
The group originally purchased a Norcross predecessor in 1995, then merged with a group of Siebe plc’s safety products business in September 1998. CSFB and UBS Investment Bank advised Norcross,
and CSFB will arrange senior debt financing for the deal, according to Brian Kwait, a managing principal at Odyssey.
Kwait declined to say how much Odyssey plans to invest. He added that his firm may try to execute the acquisition without refinancing all of Norcross’ outstanding debt, which includes $152.5 million of high-yield bonds.
Among Norcross’ attractions, said Kwait, was its abundant free cash flow and its growth characteristics. A maker of everything from protective eyewear, gloves and boots to firefighters’ helmets and coats, Norcross posted $65.5 million of Ebitda on net sales of $451.6 million during the 12 months ended April 2, 2005.
Norcross, he said, stands to benefit from an increasing number of countries that have embraced rigorous, U.S.-style regulations meant to protect workers. In the U.S., such regulation has underpinned Norcross’ growth.
“Over the last four years, even despite an industrial recession in the U.S., this company has generated attractive growth rates in all its main businesses. That has become even more apparent in the last 18 to 24 months,” Kwait said.
Like Norcross’ current owners, Odyssey will seek to bolster Norcross’ top and bottom lines through follow-on acquisitions.
Norcross’ current management team will stay on.