Seven Mile Capital Partners II LP, an affiliate of Seven Mile Capital Partners (“Seven Mile”), a leading middle-market private equity firm, has entered into a definitive agreement to acquire Microporous Products (“Microporous” or the “Company”) from Polypore International Inc. (“Polypore”) (NYSE:PPO) for $120mm. Polypore is selling Microporous pursuant to an FTC divestiture order. The transaction is expected to close in the fourth quarter of 2013.
Microporous is a leading developer, manufacturer and marketer of high performance rubber, polyethylene (PE) and hybrid (e.g., rubber and PE) battery separators for flooded lead-acid batteries. Separators are a highly-engineered, mission-critical component of lead-acid batteries. The Company’s separators are used by battery manufacturers for applications such as golf cart batteries, forklift batteries, standby power and Starting Lighting and Ignition (“SLI”) batteries for automobiles and trucks. Microporous’ product line includes the Flex-Sil®, Ace-Sil®, and CellForce® brands in addition to PE separators for industrial and PE automotive applications. In particular, the Company will be the largest producer of separators for deep-cycle flooded lead-acid batteries.
The Company supplies major North American and European lead acid battery manufacturers, and maintains an extensive customer base located across 23 countries and five continents. The Company currently has 153 employees and operates two plants. Its plant in Piney Flats, TN manufactures rubber, PE and hybrid separators for deep-cycle, stationary and motive batteries. Its plant in Feistritz, Austria manufactures PE and hybrid separators for SLI, motive and stationary batteries.
Upon the close of the transaction, Mr. Jean-Luc Koch will assume the role of Chief Executive Officer of Microporous. Mr. Koch has 16 years of experience in the battery separator industry. Mr. Koch stated, “I am excited to partner with Seven Mile and the existing management team for the re-launch of Microporous as an independent company. We have a common vision to grow Microporous by partnering with both existing and new customers. We are convinced that the Company is well-positioned to compete, with ideally-located facilities, dedicated employees, excellent manufacturing capabilities and best-in-class engineering know-how.”
Kevin Kruse, Partner of Seven Mile, stated, “Microporous is a terrific company and market leader. We feel very strongly that the Company is poised for strong growth and believe the management team, led by Jean-Luc Koch, has the deep industry knowledge and experience necessary to lead the Company into its next phase of growth and innovation as an independent company. In addition, Microporous fits very well into our investment criteria and industry focus and is a great foundation for the launch of our second fund, as Seven Mile has significant industry experience in the power and automotive industries.”
In addition, Vince Fandozzi, Managing Partner at Seven Mile, stated, “Seven Mile has been extremely impressed with the Microporous employees and management team. We believe that, with the addition of Jean-Luc Koch as the CEO, Microporous will have a world class executive team with strong operational experience. The Company has been an industry leader for decades and as the first investment in Seven Mile Capital’s new fund, we look forward to working with the management of Microporous to build on its strong history of investing in new products and technical services to support their loyal customer base.”
In addition to Seven Mile Capital Partners II LP, a group of family office investors, including Trent Capital Partners, located in Naples, Florida, and Bratenahl Capital Partners are also contributing a minority portion of the equity capital. Willkie Farr & Gallagher LLP acted as legal advisor to Seven Mile. FDX Capital LLC, a broker-dealer affiliate of Family Office Exchange (FOX), acted on behalf of Seven Mile in placing the equity provided from some of the family office investors. The underwritten debt financing will be provided by KeyBanc Capital Markets and Kayne Anderson Capital Advisors.