Investcorp purchased Archway Marketing Services Inc. for about $300 million, giving Archway's private equity backers a handsome gain on their 3-1/2-year-old investment, two people familiar with the matter said.
New York private equity shop Tailwind Capital LLC, Archway's 80% owner, reaped slightly less than a 200% profit on its roughly $50 million equity investment, these people said.
Black Canyon Capital LLC of Los Angeles netted a comparable gain on its 10% stake, they added.
Investcorp, a Bahrain-based bank and alternative asset manager, edged other suitors in an auction run by Robert W. Baird & Co., according to the sources. The price equates to about 11 times trailing Ebitda.
The deal, which closed Monday, is expected to be announced early next week, a source said.
Executives at Investcorp, Tailwind and Black Canyon did not immediately return messages seeking comment.
Rogers, Minn.-based Archway provides marketing logistics and fulfillment services to fast food chains, retailers, consumer goods and financial services companies. Its bread-and-butter business is to transport marketing brochures, signs and displays for point-of-sale product promotions. Its clients include Taco Bell, Subway, General Motors Co., MillerCoors, Loew's Cos. and American Eagle Outfitters.
The company operates 4 million square feet of warehouse and production facilities in 14 cities in the U.S. and Canada.
Tailwind and Black Canyon bought Archway from Cravey Green & Wahlen Inc., an Atlanta PE firm, in November 2008, after a deal to sell Archway to a blank-check company fell through. The price wasn't disclosed.
Archway later made three bolt-on purchases, buying Resolve Corp.'s supply chain management unit in 2009 for $18 million; Corporate Services Inc. in 2011 for $30 million, and Synq Solutions Inc. for $27 million earlier this year.
Ebitda jumped from $11 million to $27 million and revenue from $100 million to $279 million while Tailwind and Black Canyon owned it, a source said.
Investcorp was planning to raise a $175 million senior debt package through GE Capital Corp. and ING Groep NV to finance its purchase, Standard & Poor's Leveraged Commentary & Data reported last week.
The package consisted of a $30 million, five-year revolving credit facility, a $35 million delayed-draw term loan and a $110 million, six-year term, LCD said.
Davis Polk & Wardwell LLP was Archway's legal adviser.
Investcorp turned to Piper Jaffray & Co. for financial advice. Gibson, Dunn & Crutcher LLP was its legal counsel.