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CVC Capital to Buy Yellow Wood-Backed PDC

PDC plans to keep up its acquisition rate under new ownership, according to ceo James Stammer.

CVC Capital Partners is buying PDC Brands for close to $1.5 billion, according to industry sources.

PDC is made up of a handful of mass-market beauty and personal-care brands, including Dr. Teal’s, Bodycology, Calgon, Cantu, Eylure, Body Fantasies, BOD Man, Elegant Touch, Salon Systems, The Healing Garden, Designer Imposters, Wind Song and Prince Matchabelli. PDC’s brands are sold in more than 60 global markets.

The business did about $430 million in sales for 2016 — up more than 50 percent from 2015, according to industry sources, with $110 million in earnings before interest, taxes, depreciation and amortization. EBITDA margins are around 30 percent, a source said. PDC is projected to grow in the midteens percentage-wise for 2017, according to a source with knowledge of the company.

The company is being sold by private equity firm Yellow Wood Partners, which grew the business through organic sales growth and a handful of acquisitions. The auction process for PDC was described by industry sources as competitive, with multiple large private equity firms placing bids.

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“Yellow Wood invested in our company five years ago, when we were primarily known as a leading mass-market fragrance company and [they] shared our vision…to become a leading diversified consumer goods platform company with global reach,” said PDC chief executive officer James Stammer. “They really helped us invest in businesses that we could cultivate and grow and that’s been our track record with Dr. Teal’s and Cantu and Eyelure — we’ve taken businesses that had massive consumer potential and were able to add them into our sales and marketing organization and grow them rapidly and bring in millions of new consumers into the franchise.”

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Under CVC, the plan is the same — buy brands and grow them organically, Stammer said. New ownership also affords PDC a new level of global reach, he noted.

“CVC is 100 percent committed to our aggressive merger and acquisition focus within the consumer space,” Stammer said. “We want to do a lot more of what we’ve been doing for the last five years, so we’re going to continue to identify brands and bring them into our company and then grow them organically and rapidly.”

As of today, roughly 25 percent of PDC’s sales come from international markets, led by the U.K., with South Korea, Japan, Mexico, Latin America, Canada and Africa each contributing, Stammer said.

CVC’s global nature should help the business expand in Asia, Europe and Latin America, Stammer said. He will stay on board as ceo for the company’s next chapter, as will PDC’s management team, he said. Stammer didn’t rule out an eventual initial public offering as an option when asked, but noted it’s not something the business is contemplating at this time.

“During our partnership with PDC Brands the company grew dramatically with revenues growing over four [times] and EBITDA growing over five [times] over the last five years,” said Dana Schmaltz, founding partner of Yellow Wood. “The strong performance has been driven by strong organic sales growth combined with the addition of five acquisitions of nine brands that were added to the portfolio. With these efforts the company has emerged as a global leader providing unique and innovative beauty and personal care products that connect with today’s consumers.”

William Blair and Jefferies advised PDC on the deal, and Nomura and Perella Weinberg advised CVC.