The Business
Crown Paints is an Anglo – Irish manufacturer and distributor of branded paint to the retail and trade sector. The business had turnover of £180m in 2010 across the UK and Ireland with a growing export base.
Crown Paints has two manufacturing sites in the North of England and a network of over 135 Crown Decorating Centres across the UK and Ireland.
The business owns and manages brands including Crown, Crown Trade, Sandtex, Sadolin, Berger and Macpherson – all of which are widely recognised as leading retail and trade coatings names.
Endless originally acquired Crown Paints in September 2008 as a non-core asset from its former owner, Akzo Nobel. At the time, the business was heavily loss making, faced significant separation challenges from its former owner and the world was entering an economic crisis. Despite this, we are proud to have achieved a significant turnaround of the business, working closely with the management team, which was enhanced with a series of new appointments following our investment as part of our overall business improvement strategy.
The business was successfully sold to Hempel A/S, a world leading paint manufacturer based in Denmark, in June 2011. Although the terms of the divestment are undisclosed, the investment return reflects the scale of the turnaround achieved.
The Transaction
Endless acquired Crown Paints from Akzo Nobel in September 2008. Akzo Nobel was required to dispose of the UK paint business within a restricted timescale as a result of the agreement reached with the European Commission in order to secure clearance of its acquisition of ICI, which manufactures Dulux.
Value Creation
Endless worked alongside the strengthened management team to drive an operational restructuring plan through the business which generated a significant improvement in profitability, despite the difficult economic environment and global recession. Having undergone an extensive and complex separation project across its procurement and IT systems, the business became a profitable standalone entity with a strong platform for further performance and efficiency gains.
Key highlights of the investment turnaround included:
- £35 million improvement in profitability in under 3 years, taking EBITDA run rates to over £20 million
- Growth of market share from 16% to 19% during the investment period
- £10m+ investment program in factory upgrades and IT systems
- Investment in and re-launch of key brands
- Growth in exports by over 40%
- Investment in and expansion of UK and Irish store network to 135 outlets
- Full operational separation from its former owner 3 months ahead of schedule
Endless is also proud to have received several awards in recognition of the turnaround, including the Institute for Turnaround’s “Turnaround Financier of the Year – 2010” and the North West Insider's “Turnaround Deal of the Year”. More latterly management was recognised as the North West Management Team of the Year by the BVCA.
The Endless Difference
Endless was able to fully underwrite the entire transaction value from its own balance sheet and complete this highly complex acquisition within a multi-stakeholder environment and in-line with the challenging timeframe put forward by the EU Competition Commission. We demonstrated the requisite hands-on resource, expertise and professional and technical capability to find solutions to some pensions, transitional services, separation, IT, intellectual property and working capital issues which had precluded other buyers. Alongside the strengthened management team, we continued to drive strategic change initiatives through the business to ensure Crown Paints was best positioned to continue to deliver a successful and profitable performance in an ever more challenging market environment.
Endless also led the refinancing of the business, which saw The Royal Bank of Scotland plc provide up to £30 million of facilities to Crown Paints in January 2010. To secure these market-leading facilities at such a difficult time in the banking markets demonstrated the strength of the business and the progress it has made since the transaction in 2008. The business was also strongly supported throughout our investment by real estate funding from HSBC.
Exit
Endless fully exited both its equity and property investments in the business to Hempel A/S in June 2011. Hempel saw the business as a strategic acquisition to lead its global expansion into the decorative coatings market. This was an ideal close to our chapter in Crown's history.
Testimonials
"Endless invested into Crown Paints at a time of great uncertainty for the business, in the heart of the global financial crisis of late 2008. This helped to secure over 1,500 jobs when the business was loss-making and considered non-core by its previous owner. The subsequent improvement in Crown Paints’ trading performance since that time has been startling and befitting a brand of its stature.”
Brian Davidson, Group Chief Executive of Crown Paints - June 2011
"This was one of the most complex transactions seen in the market for some time. We have worked with the team at Endless on a number of investments in the past and in identifying Crown Paints as a target, Endless has bought into a business that has strong development potential.”
Andy Westbrook, Corporate Finance Partner at Deloitte - Aug 2008