Goldman Private Equity Unit Leads $1.1B Interline Brands Buyout

NEW YORK (TheStreet) -- A consortium of buyers led by a Goldman Sachs (GS) private equity fund and P2 Capital Partners is buying industrial products services company Interline Brands (IBI) for $25.50 a share, or $1.1 billion, when including the company's debt.

The deal comes at a 42% premium to Interline Brands Friday close of $17.94 and represents the Jacksonville, Fla.-based seller of plumbing, hardware and air conditioning products highest share price since 2007. As part of the deal, Goldman Sachs Capital Partners will take an equity stake in Interline Brands, while its banking unit and Bank of America (BAC) will provide debt financing.

In addition to the private equity funds participating in the buyout, Interline Brands said some members of its management team will invest in the deal. According to Nasdaq compilations of Securities and Exchange Commission filings, Interline CEO Michael Grebe is the largest insider with over 35,000 Interline shares, which represents less than 1% of the company's outstanding stock. Interline's largest institutional holders include FMR, Columbia Wanger Asset Management and P2 Capital Partners, all with over 7% share stakes.

Interline Brands said in a release that its board had approved the private equity offer, but that it will solicit third party bids through June 28. If no offer emerges, the deal should close by the third quarter.

Interline Brands rose over 39% to $25 in Tuesday pre-market trading, slightly below Goldman and P2's offer. Prior to Tuesday's buyout, Interline Brands had risen over 15% in 2012, but its shares were off over 2% in the past 12 months.

The company, which maintained profitability through the recession, saw its revenue grow to a post-crisis high of $1.25 billion in 2011, however, its profit of $37.7 million was below 2008 levels over $40 million.

"This agreement provides excellent value to shareholders. This is also an exciting new chapter for Interline, one that we believe will bring broad benefits to all of our stakeholders," said Interline CEO Grebe.

Barclays (BCS) is acting as financial advisor to Interline and the company said it has provided a fairness opinion in relation to the deal.

For more on recent buyout efforts, see why Sycamore is walking away from a $3.05 buyout offer for Talbots (TLB). See why the Gores Group is slamming the brakes on a Pep Boys (PBY) buyout for more on troubled private equity bids.

--Written by Antoine Gara in New York.