Sun Capital Partners Inc., the buyout firm that invested in the struggling toilet maker that operates under the American Standard brand, stands to double its money on the sale of the company after a turnaround.
Excluding about $200 million in debt the company has on its balance sheet, Sun Capital and minority stakeholder Bain Capital LLC are to be paid about $340 million in a sale to Japanese buyer LIXIL Corp., according to a person familiar with the matter. That’s about a two times return on the amount the private-equity firms originally invested, said the person, asking not to be identified because the information is private.
Sun Capital agreed to sell the parent company of American Standard, a maker of bath and kitchen products, for $542 million to Tokyo-based building-products company LIXIL Corp., according to a statement yesterday. Sun Capital, led by Rodger Krouse and Marc Leder, manages about $45 billion and seeks to profit by turning around underperforming companies and buying distressed assets.
Bain Capital bought American Standard for $1.75 billion in October 2007 and a month later, sold the Americas business to Sun Capital for $130 million. Sun Capital paid $25 million in equity for a 51 percent stake in the business, with Boston-based Bain remaining a minority stakeholder, according to the person. Bain, which now holds about an 8 percent stake in the Americas business, split off American Standard’s Asia business and sold it to LIXIL in 2009, the person said.
Bain’s initial investment in Piscataway, New Jersey-based American Standard came as the housing slump hurt earnings at the company, which had adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, of negative $34.2 million in 2007, said the person.
Sun Capital invested an additional $50 million in American Standard over the next several years and merged it with four similar businesses in its portfolio. The moves by Boca Raton, Florida-based Sun Capital, combined with a housing rebound, helped drive up demand. Adjusted Ebitda for the 12 months ended in May was $48.5 million, according to the person familiar.
LIXIL’s public-relations department did not immediately return an e-mailed request for comment outside normal business hours. A spokesman for Sun Capital declined to comment on the transaction.