* Financial terms not disclosed
* Deal could be worth $1.5 billion -source says
* Ares, Ontario Teachers to own equal share of CPG
* CPG management to retain minority stake
Aug 19 Ares Management LLC and Ontario Teachers
Pension Plan said on Monday they would buy building-products
maker CPG International Inc, betting on a long-awaited recovery
for an industry that has lagged the rebound in the broader U.S.
Building-products makers such CPG, currently owned by
private equity firm AEA Investors LP, have not seen the same
growth as U.S. homebuilders in the past two years as they have
faced labor shortages and a lack of financing options.
Financial terms of the deal were not disclosed but a person
familiar with the matter, who was not authorized to disclose
financial details publicly, said it values Scranton,
Pennsylvania-based CPG at around $1.5 billion, including debt.
Reuters reported in July, based on conversations with people
familiar with the matter, that Ares was bidding for CPG against
three other private equity firms: TPG Capital LP, Warburg Pincus
LLC and Berkshire Partners LLC.
CPG makes building supplies such as outdoor decking, porch
boards and plastic restroom partitions for the residential and
AEA acquired CPG in 2005 from private equity firms Whitney &
Co and Clearview Capital LLC for $380 million, according to a
2006 bond sale regulatory filing. AEA and co-investors put in
$149 million as equity for the deal, the filing shows.
Ares and Ontario Teachers will own an equal stake in CPG,
with the company's management retaining a minority stake.
CPG, which has more than $500 million in annual revenue,
filed for an initial public offering in 2011 but it never went
A sale to a private equity firm might be a better option for
CPG given recent weakness in the stocks of housing companies.
Real estate investment trust American Homes 4 Rent last
month priced its IPO at the low end of its expected price range.
Shares of homebuilder Tri Pointe Homes Inc closed at
$15.14 on Friday, below their January IPO price of $19.
Ontario Teachers and other Canadian funds such as the Canada
Pension Plan Investment Board and Caisse de dépôt et placement
du Québec have been among the world's most active dealmakers
recently, with major bets on real estate, natural resources and
Sullivan & Cromwell LLP acted as legal adviser and JP Morgan
Securities and UBS Investment Bank were financial advisers to
Ares and Teachers.
Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal
adviser and Barclays and Deutsche Bank Securities Inc were
financial advisers to CPG International.