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Denver, CO, November 22, 2005 -
KRG Capital Partners (KRG), a Denver-based private equity firm, announced
today the closing of the previously announced sale of its portfolio
company, Accellent Inc. (formerly UTI Corporation), to an affiliate
of Kohlberg, Kravis, Roberts & Co.
(KKR), in a transaction valued at approximately $1.3 billion. Accellent
is the largest provider of integrated contract manufacturing
and design services to the medical device industry.
KRG made its
initial investment in Accellent in 1999, through the acquisition
of Denver-based Star Guide Corporation, which at the time had annual revenues
of approximately $10 million and Ebitda of approximately $4 million. KRG
then embarked on an acquisition and organic growth strategy designed
to build the industry leading contract manufacturer serving the medical
device industry. Under KRG’s ownership, the company completed
nine additional strategic acquisitions in targeted high growth medical
device segments, resulting in pro forma (assuming Accellent’s recent
acquisitions of Campbell Engineering and Machining Technology Group were
completed at the beginning of the period) trailing twelve month ended
September 30, 2005 revenues of approximately $472 million and pro forma
adjusted Ebitda for such period of approximately $100 million
as of the date of closing. "This was a highly successful investment
for KRG validating our original investment thesis for the medical device
contract manufacturing sector," said Bruce Rogers, KRG Co-Founder
and Managing Director.
KRG’s original investment
thesis, developed prior to its initial investment in Accellent, was based
upon the increased "outsourcing" trend
among the major medical device companies. This trend resulted
in major medical device manufacturers requiring more services
and capabilities from their strategic partners such as Accellent, including
a more comprehensive outsourcing and contract manufacturing solution. KRG’s
strategy was to build a full service contract manufacturer that could
provide the major medical device companies broad capabilities
in design
and engineering services, precision component fabrication, finished
device assembly and complete supply chain management. This strategy
resulted in the creation of Accellent, which has now positioned
itself as the largest player and an industry leader in the medical device
contract manufacturing sector.
In 2003, KRG recruited Ron Sparks, Accellent’s current CEO, from
Smith & Nephew, a major medical device manufacturer. This followed
KRG’s recruitment of other Accellent executives including CFO Stew
Fisher, who joined Accellent in 2001. Under the leadership of Accellent’s
management team and KRG, Accellent completed its largest acquisition,
MedSource Technologies, in the summer of 2004 in a $210 million transaction. That
transaction combined two of the largest industry players at the time. Following
the acquisition, the operations of the two companies were successfully
integrated over an 18 month period, achieving substantial synergies. Rogers
remarked, "We recruited an experienced and very talented senior
executive team that led to the successful acquisition and integration
of several key add-on acquisitions, including MedSource. This was
followed by a well positioned rebranding of the company under the ‘Accellent’ name
and a realignment of the company into three major markets, cardiology,
endoscopy and orthopaedics. The Company has evolved into a clear
industry leader with comprehensive capabilities and key market
presence."
The equity invested by KRG in Accellent
to support the acquisitions was also supplemented by direct co-investment
by several of KRG’s limited
partners and co-investors, including among others, CMS Companies, AIG,
St. Paul Travelers, CSFB and First Analysis Corporation. In connection
with the MedSource acquisition, KRG brought in DLJ Merchant Banking Partners,
an affiliate of CSFB, to provide an additional $89 million of equity financing. Following
DLJ’s investment, KRG continued to lead the investment and controlled
the Board of Directors with Bruce Rogers, Co-Founder and Managing Director
of KRG, serving as Chairman of the Board. KRG, DLJ and management
continued to jointly develop and pursue the company’s growth strategy,
and worked closely to position the company for a potential exit.
In
mid 2005, the Company engaged CSFB to market the company on a
confidential basis to potential buyers. This effort culminated in a highly competitive
process in which KKR ultimately prevailed as the winning bidder. As
part of the transaction, members of Accellent management will partner
with KKR and retain an equity stake in the company. Rogers
remarked, "The Accellent management team helped KRG create significant
value for the KRG led investor group. We wish the Accellent management
team all the best as they continue to lead Accellent under KKR’s
ownership."
The sale to KKR yielded the KRG led investor
group, in the aggregate, in excess of three times their original equity
investment. It also
marks the fifth exit for KRG Capital’s Fund I, which was a vintage
1999 fund that invested in seven diverse industry "platform companies" including
Accellent.
About KRG Capital Partners
Founded in 1996, KRG is a Denver-based private equity firm that
currently has approximately $1.2 billion in assets under management. KRG
specializes in acquiring and recapitalizing unique and profitable middle-market
companies. The firm seeks investment opportunities for its partners
where KRG can work in concert with owners and operating managers who are
committed to expanding their companies and becoming industry leaders. The
result is a partnership that focuses on creating a significantly larger
enterprise through a combination of internal growth and complementary
add-on acquisitions. Since inception, KRG has invested in 23 platform
companies and has completed 62 add-on acquisitions for those platforms. For
more information on KRG Capital Partners, please visit www.krgcapital.com.
Contact Information:
Bruce Rogers, Managing Director
Email:
Steve Neumann, Principal
Email:
(303)-390-5001
All
inquiries
from
the
media
should
be
addressed
to:
Tracie Kelly, Marketing
Email:
Phone: 303-390-5060
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