In August 2014, Investcorp announced that it had agreed to sell Berlin Packaging, a leading supplier of rigid packaging products and services in North America, for $1.43 billion. The sale is the culmination of a successful seven-year partnership with Berlin Packaging and is a quintessential example of Investcorp’s approach to growing portfolio companies and maximizing value from due diligence to exit.
Investcorp acquired Berlin Packaging in 2007 but the initial process started three years earlier when the firm began tracking the packaging sector and identified Berlin Packaging as one of the most prominent players in the industry. Even before the first discussion with Berlin Packaging, Investcorp had developed a strong conviction about the industry. The diverse end-markets served offered stability of demand through economic cycles while fragmentation in both the customer and supplier base offered companies like Berlin Packaging the unique opportunity to be a high value-add partner to both constituents. There were multiple ways to grow the business, which already had strong margins and generated strong free cash flows. In addition, the fragmentation of packaging suppliers meant that there was an opportunity to further accelerate growth through acquisitions. Above all, Berlin Packaging was led by a best-in-class management team that was excited to continue to grow the business.
Berlin Packaging’s CEO, Andrew Berlin was intrigued by Investcorp’s knowledge of the packaging sector.
After more than two years of following the industry, Investcorp met with Berlin Packaging’s CEO, Andrew Berlin. Mr. Berlin was intrigued by Investcorp’s knowledge of the packaging sector and realized that while Berlin Packaging continued to achieve impressive results, it required additional resources to progress to its next stage of growth. Andrew was also impressed by Investcorp’s long history of successfully partnering with family-owned businesses and founder entrepreneurs to help grow their companies while preserving the strong culture that drives their success. The investment ultimately closed during a tumultuous period in the financial markets and the Great Recession provided a challenging backdrop to the early days of the investment. During this downturn, when a lot of companies were scaling back, the team saw an opportunity to accelerate growth and continued to make investments in the salesforce, global sourcing capabilities and business development professionals. These investments in concert with the continued operational excellence allowed Berlin Packaging to gain share rapidly and position it for long-term success.
"Investcorp is a true partner that was committed and eager to support our company's short and long term objectives."
Andrew Berlin, Chairman and CEO of Berlin Packaging, commented on his relationship with Investcorp: "Investcorp is a true partner that was committed and eager to support our company's short and long term objectives. Although market conditions suggested scaling back during the downturn, we viewed it as an opportune time to invest meaningful resources into our sales operations - positioning us to better serve our customers and drive growth for our business. I will always remember Investcorp’s contributions and thank the team there for their partnership and friendship over the last seven years."
In addition to encouraging strong organic growth, Investcorp supported Berlin Packaging's desire to grow through four separate add-on acquisitions - All-Pak and Continental Packaging Solutions in 2010 and Lerman Container and United States Container Corporation in 2012, strengthening the company's footprint and capabilities. Importantly, when it became necessary to support the Company with additional capital to fund the acquisition of All-Pak in 2009, both Investcorp and Andrew Berlin were excited to put in additional equity, given the strong conviction in the industry and the business model.
Platform for success
Berlin Packaging was able to grow organically at double the rate of the broader packaging industry and quadruple profitability over the course of our partnership.
Through our collaborative efforts, Berlin Packaging was able to grow organically at double the rate of the broader packaging industry and quadruple profitability over the course of our partnership.
After more than seven years of ownership, given Berlin Packaging’s financial performance and ongoing momentum, the scarcity value for great businesses and the status of the debt markets, Investcorp determined that a sale was the next logical step in our relationship and an opportune time to maximize the returns for our shareholders. After a very competitive process including several interested parties, we were able to reach an agreement with Oak Hill Capital to acquire Berlin Packaging for $1.43 billion.
Following the sale, Kevin Nickelberry, Managing Director at Investcorp, stated, "Andrew Berlin and the entire Berlin Packaging management team have done an outstanding job of building a market leading company with a highly differentiated business model and a track record of strong financial performance. We are proud of what we accomplished with the Berlin Packaging team and we wish them continued success."