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Phillips-Medisize sold to private equity group Golden Gate Capital

By: Michael Lauzon

May 7, 2014

Medical molder Phillips-Medisize Corp. is being bought by private equity firm Golden Gate Capital.

The two firms announced a definitive agreement on May 7 and said the deal should close “in the coming months.” They did not disclose terms.

The announcement confirmed recent speculation that Kohlberg & Co. LLC was negotiating to sell the company. A recent Wall Street Journal report indicated the sale price could be as much as $800 million, or about 10 times Phillips-Medisize’s estimated earnings before interest, taxes, depreciation and amortization. Golden Gate would not comment on the figures, and Phillips-Medisize did not have any comment beyond the news release.

Phillips-Medisize of Hudson, Wis., is a major injection molder that says it does 75 percent of its business in health care applications such as medical devices, pharmaceutical packaging, drug delivery, glucose meters, drug inhalation devices, and disposable surgical devices and diagnostic components. The company also is a player in defense, automotive and consumer markets.

“Golden Gate’s financial support, successful track record of backing manufacturing companies and deep industry relationships will help perpetuate the company’s strong momentum and further solidify our market-leading position,” stated Phillips-Medisize President and CEO Matt Jennings in a news release.

Golden Gate of San Francisco lists its major portfolio industries as financial services, industrials and energy, information technology and business services, retail-related markets, software and technical hardware, telecommunications and semiconductors. It has no other health care related business but its industrial companies have expertise in design, production and supply-chain management. Golden Gate has about $12 billion in capital under management.

Phillips-Medisize provides a strong design and manufacturing platform with global scale, noted Golden Gate managing director Rajeev Amara in a news release. He indicated Phillips-Medisize is poised to grow from the trend among original equipment manufacturers to outsource medical component needs. Golden Gate will invest in the molder to support its growth, he added.

Phillips-Medisize said its annual sales are about $600 million. It had estimated North American injection molding sales of $275 million for the fiscal year ending in June 2012, according to data from Plastics News’ injection molders raking survey. Ten of its 11 North American injection molding plants are in Wisconsin, the other is in Mountain View, Calif. The survey estimated Phillips-Medisize had 228 injection presses and about 1,200 employees in North America.

Phillips-Medisize also has a manufacturing footprint in Europe, Mexico and China. Most of the European operations relate to Kohlberg’s acquisition of Dutch firm Medisize Inc. when they combined it with Phillips Plastics Corp. in 2011. At the time, Medisize’s 2010 sales were reported at about $170 million.

Phillips-Medisize expanded into China and Mexico in 2013 through acquisition. New business led it to expand its Finland operation this year.

In total, Phillips-Medisize employs more than 3,100 at 19 locations around the world.

Last October Jennings said his company will set up a design center in its Suzhou, China, plant. Current design operations are centered in Hudson and Mountain View.

Phillips-Medisize boasts that it helps medical products OEMs get new products to market quickly by offering integrated design, molding and automation services that drive costs down while ensuring high quality. In addition to thermoplastic injection molding and assembly, it has capacity for molding liquid silicone rubber, ceramics and magnesium along with other metals.

Kohlberg partner Chris Anderson said in a news release that his company is “pleased with the outcome of our investment in Phillips-Medisize.” Kohlberg bought Phillips in 2010.

Goldman, Sachs & Co. and Ropes & Gray LLP acted as financial advisor and legal counsel, respectively, for Phillips-Medisize. Robert W Baird was Golden Gate’s financial advisor and Kirkland & Ellis LLP was its legal counsel.