Sun Capital partners divests ASD Americas Holding

October 2013 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

In a deal originally announced in June, Japanese company the LIXIL Corporation completed its acquisition of a 100 percent share of ASD Americas Holding Corporation, a North American manufacturer of high end kitchen and bathroom products. The deal saw LIXIL acquire ASD, the parent company of American Standard Brands, for an enterprise value of around $542m.

ASD was purchased from an affiliate of private equity firm Sun Capital Partners Incorporated. According to a statement released by LIXIL confirming completion of the deal, ASD will remain headquartered in New Jersey in the US and will continue to operate in all of its existing facilities. Globally, American Standard Brands employs around 5000 people across its various locations.

By divesting its interest in ASD, Sun Capital, based in Boca Raton, Florida, has doubled its original investment in the company. Sun Capital, together with fellow private equity firm Bain Capital, formed ASD, carving out the North American division of American Standard in 2007 for around $130m. Sun Capital and Bain divided the $50m equity for the deal 51 percent to 49 percent respectively. In 2008 Sun Capital invested another $50m to fund ASD’s merger with two other firms in its portfolio: Crane Plumbing Corporation and Eljer Holding Corporation. “The market leadership that American Standard enjoys today has been fuelled by considerable operational improvements, an expanded product platform achieved through four strategic acquisitions, and a commitment to innovation,” said Marc Leder, co-chief executive of Sun Capital. “I expect LIXIL will continue to invest in these strategies, and that the combined technology and product development capabilities of American Standard and LIXIL will ensure significant progress in the years ahead.”

The American Standard Brands company, which can trace its roots back nearly 140 years, had been struggling enormously before Sun Capital intervened. In the year prior to the private equity firm’s first investment, ASD posted a loss of around $34.2m. In the 12 months prior to the sale announcement, ASD reported a jump of $48.5m.

The deal for ASD is part of LIXIL’s wider plans for the expansion of its global business. In North America alone, Permasteelisa Group, a subsidiary of LIXIL acquired for around €573m, has revenues of approximately ¥39bn. According to a statement released by the company, by the end of LIXIL’s financial year, which ended on 31 March 2013, LIXIL Group’s international sales had reached around ¥200bn, or around 14 percent of total sales. LIXIL anticipates that this will increase to approximately ¥350bn or 20 percent. “American Standard is the leader in the kitchen and bath products market with a deep history of more than 130 years,” said Yoshiaki Fujimori, president of the LIXIL Corporation. “American Standard will serve as a key platform for LIXIL as we continue to fulfil our ambitions to become a worldwide leader in the building materials and housing equipment market. LIXIL already owns the American Standard brand in the Asia Pacific market, and this transaction will strengthen the brand and the company’s considerable manufacturing capabilities and technological best practices.”

The LIXIL Group is a listed holding company which reported sales of ¥1.4 trillion in the 2012 financial year. The LIXIL Group subsidiary, LIXIL, launched in April 2011, is the largest housing and building materials company in Japan. The company is a market leader in eight different categories. LIXIL enjoys a 55 percent market share in exteriors, a 50 percent share in housing sashes and doors, a 50 percent share in curtain walls and a 40 percent share in sanitary wares.

Richard Summerfield