By Kelly Holman
July 7, 2006
Key Principal Partners, the Cleveland private equity affiliate of financial services company KeyCorp, has sold Ampac Packaging LLC in a secondary buyout to an investor group led by Chicago-based Prudential Capital Group and Boston-based Falcon Investment Advisors. Ampac’s management team will retain a minority stake of the Cincinnati-based paper and plastic packaging company.
Financial details of the deal, announced late Thursday, July 6, by KPP, were not disclosed.
Ampac sells to pharmaceutical and consumer products companies and makes shopping bags for national retailers and specialty food businesses at manufacturing plants across North America and Asia.
Officials from Falcon Investment did not immediately return calls, while Prudential Capital executives were unavailable Friday afternoon.
The sale generated a return of 3 times KPP’s $22 million investment in Ampac, said KPP partner Mike Conaton, adding that the sale was negotiated directly without an auction.
KPP provided $9 million of subordinated debt to a predecessor company in 2000 to finance the acquisition of Interstate Packaging Corp. A year later, KPP formed Ampac Packaging LLC to acquire a majority stake in newly renamed Ampac Paper and its sister company, Ampac Plastics.
Over time, KPP invested a total of $22 million as Ampac made a total of five acquisitions.
“The management team had a very defined plan for growth that was successful in building out the higher growth end of its flexible packaging business,” Conaton said of the acquisitions.
Last year, Ampac chief executive John Baumann jump-started the company’s flexible packaging business by acquiring Flexicon Inc. of Cary, Ill., and Kapak Co. LLC of Minneapolis in January and May, respectively, for undisclosed terms.
“Ampac was very well positioned to acquire Kapak and Flexicon and bring them into Ampac flexibles,” Conaton said, referring to one of the company’s business lines.
Under KPP, Ampac set up manufacturing operations in China, and Ampac’s revenues grew from just under $80 million to $225 million in the last 12 months, said Conaton. He declined to disclose Ampac’s cash flow and debt figures.
Besides Conaton, KPP’s deal team included managing partner Leland Lewis and senior associate Sean Mooney.
Ampac CEO Baumann will retain his position under Prudential Capital and Falcon Investment.
Dechert LLP attorney David Denechaud was counsel to KPP.
The Ampac sale closed on July 3.