By: Catherine Kavanaugh
March 25, 2014
GAF Manufacturing LLC, which does business as Midwest Plastics Products, has been acquired by Minneapolis-based Spell Capital Private Equity in a leveraged transaction with management.
GAF primarily makes HDPE drain tiles, fittings and pipe accessories for the agricultural drainage and commercial tubing markets but it also produces blow molded containers and other products.
Terms of the transaction were not disclosed but Cole Taylor Business Capital, the asset-based lending division of Cole Taylor Bank, says in a news release that it is funding a $7 million senior debt facility to GAF.
GAF is based in Jefferson, Wis., and has a second facility in Plainfield, Iowa.
“We’ll keep both facilities open and our intention is to grow both of them,” Spell Capital managing director Steve Jones said in a telephone interview.
The company positioned itself as a quality and price leader in the drain tile industry by delivering a product that is heavier and more durable than competitors, Jones added.
“The bulk of their business is agricultural; mostly farmers who need to drain off chronically wet areas so they can improve the yields on their crops. The tile is used to improve the quality of the ground,” Jones said.
Spell Capital specializes in the acquisition of controlling interests in industrial manufacturing businesses that are historically profitable and considered well-managed. Spell collaborates with management to grow businesses internally and through add-on acquisitions.
“Over the years we’ve had a lot of experience with plastics-related businesses and what attracted us to this company is it has a very good president in place, Dawn Lucas, and we think there’s opportunity for both organic growth and growth through acquisitions,” Jones said.
GAF is the third portfolio company investment in Spell’s Fund IV. The drain tile aspect of the business, which started in 1972, will get a lot of attention going forward.
“Next we work with the president to grow the business organically and look for acquisition candidates,” Jones said. “We think there’s an opportunity to do some consolidation in the business.”