Pritzker Private Capital (PPC) has agreed to acquire Highline Aftermarket, the leading manufacturer of windshield wash fluids in the US and a portfolio company of The Sterling Group; and Warren Distribution, one of the largest makers of private-label automotive lubricants and chemicals.
Warren Distribution’s products include passenger car and small engine motor oils, heavy-duty motor oils, industrial lubricants and greases, automatic transmission fluids, brake and power steering fluids, and oil and gasoline performance additives. The company’s private label customers include many of the largest retailers, marketers, and lubricant distributors in North America and in more than 30 countries.
Warren has the capacity to produce millions of gallons of bulk and packaged lubricants from more than 1.1 million square feet of manufacturing and distribution facilities located in Iowa, West Virginia, Alabama, and Texas. The Omaha-headquartered company was founded in 1922 by James Schlott, the grandfather of Bob Schlott, the current chairman and CEO. Warren is majority-owned by Mr. Schlott.
Memphis-headquartered Highline Aftermarket is a manufacturer and distributor of packaged automotive chemicals, lubricants, and parts, which it sells to independent distributors, quick lube shops, jobbers, wholesalers, and specialty retailers. The company is the leading manufacturer of windshield wash in the US and has a portfolio of national brands, original-equipment replacement products, and private-label products. Highline has more than 500 employees, 15 distribution centers, and 8 manufacturing facilities.
Darcy Curran, Highline’s CEO, will lead the combined business and Bob Schlott will become a board advisor.
Highline was formed by The Sterling Group through its third fund in April 2016 when it acquired DYK Automotive (owned by the Dobbs’ family office) and Auto Aftermarket Holdings (a corporate carve-out from Japan-based conglomerate Marubeni).
During its ownership term, Sterling completed five add-on acquisitions including:
- Plews & Edelmann’s retail segment, an Illinois-based distributor of automotive and industrial lubrication, air hoses, and tire repair tools and accessories (September 2020);
- Camco Manufacturing’s liquids division, a manufacturer of windshield wash, recreational vehicle antifreeze, and diesel exhaust fluid with plants in Massachusetts, North Carolina, Indiana, and Oregon (November 2019);
- Service Champ, a Pennsylvania-based specialty distributor of automotive aftermarket maintenance parts and accessories to quick lube, general repair, and car wash shops (March 2017);
- Levin’s Auto Supply, a California-based supplier of automotive aftermarket products to retailers and automotive parts stores (January 2018); and
- South/Win, a North Carolina-based private label and contract manufacturer of automotive fluids sold under a range of brands including Rain-X, Windex, Blue Coral, and Krystal Kleer (May 2018).
“Working with Sterling, Darcy Curran and the entire Highline team drove exceptional execution,” said Gary Rosenthal, a partner at The Sterling Group. “During Sterling’s ownership, Highline has more than tripled in size, with every aspect of the business experiencing investment and significant improvement. Additionally, consistent with Sterling’s practice, a large number of Highline employees became equity holders and will benefit substantially from the transaction.”
“Sterling’s deep experience in distribution and value-added, hands-on approach to partnering with our management team, was instrumental in building Highline from a group of separate legacy businesses into an integrated, functionally organized, efficient market leader taking advantage of numerous growth opportunities,” said Mr. Curran.
At the closing of the sale, which is expected by December 2020, the combination of Highline and Warren will have 27 facilities across North America and more than 22,000 SKUs of washer fluids, engine lubricants and consumable automotive aftermarket products.
“We are thrilled to partner with Darcy, Bob and the Highline and Warren teams in building this exciting combination for long-term success,” said Michael Nelson, the head of investing at PPC. “As a leading supplier for the automotive aftermarket, the combined company will have tremendous opportunities for growth, both through organic initiatives and accretive acquisitions.”
Chicago-based Pritzker Private Capital acquires North America-based middle-market companies that have enterprise values between $100 million and $750 million and EBITDA of more than $15 million. Sectors of interest include manufactured products, services, and healthcare. In July 2018, PPC held a final closing of PPC Fund II LP at its hard cap of $1.8 billion. The firm is led by Tony Pritzker and the former investment and operating professionals of Pritzker Group Private Capital.
Houston-based The Sterling Group invests in manufacturing, industrial services and distribution companies that have enterprise values from $100 million to $750 million. The firm emphasizes an operational approach in partnership with management teams to grow and improve the companies it acquires. Since its founding in 1982, The Sterling Group has sponsored the buyout of 57 platform companies and numerous add-on acquisitions with a total transaction value of over $14 billion.
In June 2020, Sterling held an oversubscribed and hard cap close of its fifth fund, Sterling Group Partners V LP, with $2 billion of capital. The new fund was raised after just four months of marketing.
Private Equity Professional | October 9, 2020
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