Bain capital to buy Hayward

Boston-based Bain Capital, one of the nation's leading private investment firms, signed a letter of intent to acquire the pool and plastic products business of Hayward Industries Inc., in March, according to company officials.

Hayward's filtration and separation business is not part of the proposed transaction and will be retained by Oscar Davis, Hayward Industries' current chairman and CEO. Davis will give that title up to Paul Lawer, the current president and CEO of Hayward Pool Products Inc., when the deal closes.

Terms of the acquisition were not disclosed. However, according to several sources, Bain agreed to pay $570 million for the Elizabeth, N.J.-based company, which makes pool and spa equipment.

"Bain Capital looks forward to working with the management and employees of Hayward in furthering the company's tradition of product and market leadership in the pool equipment industry," said Steve Zide, New York-based managing director at Bain Capital.

Lawer says the transaction will provide the company with a financial shot in the arm that should boost its bottom line.

"We believe the increased financial resources and stability [resulting from the sale] will afford us the tools to continue to grow our business while focusing on continuous improvement in our core operations," Lawer said.

The agreement ends months of speculation among industry insiders of an impending sale.

"It was common knowledge that Hayward was being sold, so we were not surprised to hear that a deal had been made," said Dennis Ruis, vice president, pool and spa division at Sta-Rite Industries Inc. in Delavan, Wis., and one of Hayward's main competitors. "Hayward has always been a good competitor," he added. "I expect that they will continue to be."

Danaher Corp., the Washington, D.C.-based parent of AquaChek Pool & Spa Test Strips, reportedly dropped out of the bidding process several months ago. The move left Bain and Warburg Pincus, a private equity and venture capital firm in New York, as the two top suitors.

Some distributors think an acquisition of this magnitude by an outside company represents how much the pool and spa industry has matured in recent years.

"It is a positive sign of a growing industry, and one that is garnering increasing levels of investor attention," said Manuel Perez de la Mesa, president of Covington, La.-based SCP Pool Corp., reportedly the nation's largest distributor of pool supplies.

Other manufacturers believe the acquisition strengthens the competitive nature of the industry.

"We welcome good, healthy competition," said Bill Whitehurst, vice president/general manager at Pentair Pool Products in Sanford, N.C. "These financial buyers will ensure Hayward's stability as a long-term, solid competitor."

Many industry veterans predict continued consolidation. "The pool industry has been consolidating at the manufacturer and distributor levels for more than a decade," said Bob Rasp, general manager of the pool products and heating systems segments at Water Pik Technologies Inc. in Moorpark, Calif., and past NSPI Manufacturers Council chairman. "The net result of this consolidation is a stronger pool industry."

Hayward has approximately $300 million in annual revenue and 400 employees in California, North Carolina and New Jersey. Company officials did not confirm if staffing will remain in place, or any major changes in operation or management are anticipated.

COPYRIGHT 2003 Hanley-Wood, Inc.
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