has sold its portfolio company
Headquartered in Andover, Massachusetts, California Products Corporation ("CPC") is a leading manufacturer of architectural and specialty coatings. CPC operates in three divisions: California Paints, California Sports Surfaces, and Fiberlock Technologies.
The Paints division manufactures premium exterior and interior paints along with exterior wood stains. Sports Surfaces is the world's largest producer of acrylic athletic surfacing materials, primarily for tennis courts and running tracks. Fiberlock Technologies offers a broad line of products for mold remediation and encapsulation.
Delos Capital and CPC's management team acquired CPC in 2013 and subsequently engaged Grace Matthews (GM) to advise on strategic acquisitions and to help position CPC for an eventual sale. During Delos ownership, CPC acquired Muralo Paint, Latexite International, Premier Concepts, Guardian Crack Repair Products, and Dry-Treat.
In early 2015, Audax Group, a Boston-based middle-market private equity firm, acquired Nicoat, a manufacturer of specialty packaging and printing coatings. After the transaction, Audax communicated to GM its desire to acquire additional companies and create a larger coatings and adhesives platform. GM knew Nicoat well, having sold the business in 2010 to its prior private equity owner, and suggested an informal meeting between Audax and Delos to explore the benefits of a business combination effectively, a brainstorming session. Initial discussions led to enthusiastic support for a merger, despite the relatively short hold times of the two businesses.
GM hosted further discussions to analyze potential synergies such as raw material purchasing, cross-selling opportunities, and manufacturing efficiencies. GM's industry knowledge was critical in framing CPC's market position and helping Audax understand the areas in which Nicoat was complementary to CPC. An emphasis on CPC's strong brand identity, leadership position in several niche coating markets, and loyal dealer network were key to the discussions. The process remained relatively fluid by design, with a strong focus on value creation for all parties.
CPC's shareholders and management ultimately decided to sell the majority of the business to Audax. The combination of Nicoat and CPC represented the formation of a new specialty coatings and adhesives platform that Audax saw opportunity to grow rapidly through acquisition in both new and existing end markets, products lines, and technologies. Delos Capital remained a shareholder in the combined entity.
CPC's shareholders and management were excited by Audaxdepth of experience in the specialty chemicals industry and proven track record of building companies through acquisition. Audax, understanding the value of CPC's portfolio of respected brands and manufacturing expertise, viewed CPC as a key component of its new specialty coatings platform. The combined businesses provided multiple synergy opportunities and served as a foundation for future growth into both existing and new markets.