Monday, August 15, 2016

Axalta: Carlyle's 2nd Biggest Cash In Ever

Bloomberg reported:

When Carlyle Group LP orchestrated a $4.9 billion buyout of DuPont Co.’s auto-paint business in 2013, competitors said the private equity firm overpaid. Three years later, Carlyle has reaped its second-biggest profit ever on the deal.

The asset manager sold on Tuesday its remaining stake in Axalta Coating Systems Ltd., previously known as DuPont Performance Coatings. The $1.35 billion that Washington-based Carlyle plowed into the deal grew to $5.8 billion, according to regulatory filings, through a series of stock sales starting last year.
Axalta CEO Charlie Shaver refocused the company’s auto-refinishing unit to win business from growing multi-shop operators, rather than individual car shops.
Carlyle happened to own a growing multi-shop operator, Service King.   When Carlyle purchased Service King it operated 47 auto body repair centers.  In 2014 when it did a deal with Blackstone Service King had 177 auto body shops.  Carlyle steered all of Service King's business to Axalta during their ownership of both companies.  A OneCarlyle case study stated:

  • Entered into an enterprise-wide supply partnership with Axalta Coating Systems (a Carlyle Partners V portfolio company), a global provider of liquid and powder coatings in the automotive industry
The Carlyle Group purchased a UK based auto repair chain, Nationwide Accident Repair Services (NARS), in early 2015. The NARS network now stands at 124 sites following its most recent acquisition.

Carlyle may be skilled in reading which industries are ready to turn around, but I believe they steer business between affiliates to accelerate changes.

Carlyle got in and out of Landmark Aviation several times.  The PEU is in a position to steer affiliate private jet needs to Landmark during periods of Carlyle ownership and guide it elsewhere later should it suit.  Carlyle's most recent Landmark sale garnered over $2 billion.

Bloomberg missed Carlyle's first roundtrip on Landmark Aviation when it sold the company to Dubai Aerospace for $1.8 billion.  Carlyle had the connections to keep the deal on the down low between the Dubai Ports brouhaha and the NASDAQ-Bourse fiasco.

On the second Landmark sale Carlyle used someone with connections.  Ironically it's an attorney who likes to race cars.  I wonder if he got any free Axalta paint from the deal.

Update 8-16-16:  Carlyle announced a deal to buy mobile security company, NetMotion, which targets large enterprise customers.  Carlyle owns more than a handful of those.