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Armored AutoGroup Eyes Next Steps After IDQ Buy

NEW YORK (The Deal) -- Armored AutoGroup, the Danbury, Conn.-based maker of automotive cleaners and fuel additives, is considering a number of options, including an initial public offering or sale, according to its chief executive.

CEO Michael Klein said, after a company presentation at the Jefferies' consumer and retail conference in Nantucket, Mass., Thursday, that Armored is moving forward with the integration of IDQ Holdings Inc., which makes vehicle air-conditioning do-it-yourself recharge products, that it acquired about three months ago for undisclosed terms.

With IDQ adding another $10 million a year in additional Ebitda through synergies-in total, $137 million over the past 12 months for the combined companies-Klein said Armored's options are many. He added that adjusted Ebitda was $122 million for the combined companies.

Most of the synergies are being realized between the two companies because Armored and IDQ had relationships with different groups of retailers and can cross-sell their products. Armored also has a large international presence, which will be key to increasing IDQ product sales as it had minimal presence outside of the U.S.

Klein said the company had been receiving financial advice from investment bank Jefferies LLC, while its PE sponsor Avista Capital Partners LP had used J.P. Morgan & Co. as its financial adviser.

Armored was acquired from Clorox by Avista in 2010 for $780 million.

PE firm Kinderhook Partners LP, which owned IDQ, also continues to hold a substantial stake in Armored AutoGroup following the merger, Klein noted.

Klein said it was a bit early for an IPO, even though it is an option. A sale to consumer conglomerates like Jarden (JAH - Get Report) or a Church & Dwight (CHD - Get Report), would be attractive as well, and could happen quickly depending on the offer, he agreed. Klein added the caveat that the company is under no pressure to sell.

Both Jarden and Church & Dwight have previously voiced an interest in entering consumer categories via acquisitions if the target holds a dominant position in that segment.

Armored AutoGroup makes consumer products in several categories that hold the number one or two position in terms of market share. Market leaders include its ArmorAll product in auto care appearance. STP holds the number two position in the performance chemicals category, behind Lucas Oil Products Inc. And IDQ is the leader in air-conditioning recharge products.

Other options for the company include refinancing debt, as its bonds trade at an all time high, Klein said, as well as pruning the portfolio through divestitures or making acquisitions.

One attractive acquisition could be that of Old World Industries LLC, the Northbrook, Ill.-based leader in the anti-freeze space. Klein said it would be good to have an off-cycle winter business to balance out its summer-related air-conditioning recharge business.

Old World Industries did not immediately respond to requests for comment.

Other attractive acquisitions are of distributors, particularly for its IDQ product, which requires people who can train retailers and consumers how to use the products.

Before the merger, Armored had revenue of nearly $290 million for the fiscal year ended Dec. 31 and long-term debt of about $544 million, according to regulatory filings.

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