Goldman Private Equity Arm Purchases Interline Brands

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Goldman Private Equity Arm Purchases Interline Brands

On Tuesday, Interline Brands Inc. (NYSE:IBI) agreed sell itself to Goldman Sachs Group, Inc. (NYSE:GS)’s private equity arm, GS Capital, and P2 Capital Partners in a $1.1 billion transaction, which includes debt.

Interline Brands is a repair products distributor for professional contractors.

In the deal’s terms, the firms will pay $25.50 per share in cash; this represents a 42 percent premium to the $17.94 closing price on Friday for Interline and a 31 percent increase to its 30-day average closing price, according to The New York Times.

Michael J. Grebe, Interline’s chairman and chief executive, said in a press release, “This agreement provides excellent value to shareholders. This is also an exciting new chapter for Interline, one that we believe will bring broad benefits to all of our stakeholders.”

Who is Interline?

Founded in 1978 as Wilmar Industries, the company hit the public markets in 1996 but after four years, it was purchased by an investor group for about $300.8 million in cash. This included Parthenon Capital LLC, Chase Capital Partners, Chase Manhattan Bank and Sterling Investment Partners LP.

In 2004, it had a public offering, raising $187.5 million and now it will return as a private company.

Interline directly markets and distributes products including janitorial equipment and air conditioner parts. In 2011, the company saw $37.7 million in net income, representing its third consecutive annual rise, on $1.2 billion in revenue.

The deal with the two firms has been structured as a management buyout and so members from Interline’s executive team will also invest. Goldman and Bank of America (NYSE:BAC) have committed debt financing to them.

The deal will also enable Interline until June 28 to seek higher bids, known as the “go-shop” period. If bids don’t come through, then the transaction should close by September’s end.

Attorneys for the deal included the law firm Paul, Weiss, Rifkind, Wharton & Garrison for Interline along with Barclays as an advisor. Goldman advised GS Capital Partners and law firm Fried, Frank, Harris, Shriver & Jacobson participated. For P2, it received legal counsel by Debevoise & Plimpton.

The market reacted well to the news with shares of Interline rising almost 40 percent on Tuesday morning.

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