Goldman Sachs (GS:US) Group Inc.’s private- equity unit and P2 Capital Partners LLC agreed to buy Interline Brands Inc. (IBI:US), a distributor of janitorial, plumbing and lighting products that went public in 2004, in a deal valued at $1.1 billion including debt.
Funds managed by GS Capital Partners and P2 Capital will pay Interline shareholders $25.50 a share, 42 percent higher than the closing price on May 25, according to a statement from the Jacksonville, Florida-based company today. Interline may solicit alternative proposals through June 28.
The deal would mark Interline’s return to private hands after eight years. Formed as Wilmar Industries in 1978, the company went public in 1996 and was purchased four years later by an investor group including Parthenon Capital LLC, Chase Capital Partners, Chase Manhattan Bank and Sterling Investment Partners LP in a cash deal valued at about $300.8 million. The company raised $187.5 million in its public offering in 2004.
“Interline has operated successfully in both public and private settings in the past,” said Michael J. Grebe, Interline’s chairman and chief executive officer. “GS Capital Partners and P2 Capital Partners have a shared vision of our value creation opportunities and the actions needed to realize them.”
Interline soared (IBI:US) 40 percent, the most since its IPO, to $25.08 at the close of trading in New York. The stock has gained 61 percent this year.
Plumbing and Lighting
Interline, which distributes products such as plumbing and lighting fixtures and cleaning products, has operations primarily in North and Central America and the Caribbean. Its brands include AF Lighting, CleanSource janitorial and sanitation products, and Hardware Express home and building supplies, according to the company’s website. The company has grown through acquisitions such as the purchase of Barnett Inc. in September 2000 and Florida Lighting in November 2003.
In addition to equity from funds managed by GS Capital Partners and P2 Capital Partners, both based in New York, members of Interline’s management plan to invest a portion of their proceeds from the transaction, according to today’s statement. The company’s board of directors approved the offer and agreed it would pay GS Capital Partners and P2 Capital Partners a termination fee of $13.9 million if it accepted a better proposal during the so-called go-shop period, according to a regulatory filing today.
Interline is being advised by Barclays Plc (BARC) and receiving legal advice from Paul, Weiss, Rifkind, Wharton & Garrison LLP. Goldman Sachs is advising GS Capital Partners, and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal adviser. P2 Capital Partners is receiving legal advice from Debevoise & Plimpton LLP.
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