The news today of the sale of Oldcastle BuildingEnvelope® (OBE) was expected. The buyer was a bit of a surprise, and the price was a shocker.
Somehow the news that Irish company CRH was interested in divesting of OBE made its way into the business press late last year. This in itself was highly unusual, as the parties involved usually take great pains to keep such information confidential until a deal, or at least an agreement in principle, is completed. They do so for a variety of reasons including security and regulatory ones. I could not think of another case where an impending sale had been “leaked” to the public without closely shortly thereafter. When Bloomberg News published the original story on December 7, it seemed a deal would be announced in a few days or, at the very least, close by the end of the year.
But that never happened, leading me to wonder if a deal in negotiation had not been consummated and a new suitor—or at least one with deeper pockets—was being sought.
The buyer, KPS Capital Partners LP, has completed more than 100 controlling investments through six different funds in industries such as auto parts, capital equipment, healthcare, consumer and luxury products, among others. KPS is a global firm with an investor base of 26 countries.
KPS paid $3.45 billion in cash for OBE and its holdings. The sale includes C.R. Laurence, which OBE had purchased in September 2015. Our daily e-news service, USGNN.com, at that time, reported that the purchase was made for a total consideration of $1.3 billion, which included deferred consideration at a net present cost of $86 million–payable over five years. The business was acquired debt-free.
A lot has changed since that time. The effects of the pandemic, the labor shortage and an exit of many long-time employees at C.R. Laurence, as well as the opening of a new competitor, in particular, all bring new challenges. “We look forward to partnering with OBE’s talented employees and management team under the leadership of president and CEO Liz Haggerty to accelerate the company’s value creation opportunities,” said Raquel Vargas Palmer, co-managing partner of KPS.
OBE has the opportunity to become the “superstore” for the entire glazing industry —in all its facets. Whatever comes next will be interesting.