M&A Deals of the Week

Pentair and GE Water will create joint venture in Milwaukee
Pentair Inc. and GE Water & Process Technologies, a unit of the General Electric Co., announced they will locate the global headquarters of their drinking water quality joint venture business in the Milwaukee area. The companies will combine Pentair’s global water softener business with GE’s residential water filtration business.

Golden Valley, Minn.-based Pentair and Trevose, Pa.-based GE Water & Process Technologies both already have some operations in the Milwaukee area. GE spokeswoman Ellen Mellody said she could not be more specific about the location of the joint headquarters or how many jobs would be created in southeastern Wisconsin.

Under the terms of the agreement, Pentair has an 80-percent ownership stake and GE has a 20-percent stake of the joint venture, which will be called Pentair Residential Filtration.

With the formation of the joint venture, Pentair and GE will be better-positioned to serve residential customers with industry-leading technical applications in the areas of water conditioning, whole house filtration, point-of-use water management and water sustainability, said Randall Hogan, chairman and chief executive officer of Pentair.

"Further, this joint venture advances Pentair’s current residential filtration strategy for growth. We believe we will accelerate revenue growth by selling GE’s existing residential conditioning and treatment products through Pentair’s sales channels, and by gaining access to some of GE’s current and emerging filtration technologies," Hogan said.

In 2007, the combined residential and commercial net sales of the parent companies were approximately $450 million USD. "We are excited about the growth opportunities this unique partnership brings our business," said Jeff Garwood, president and CEO of GE Water & Process Technologies. "Partnerships such as this one create an excellent opportunity to develop and introduce new technologies that will meet the needs of both developed and emerging markets. It is also another example of how GE continues to partner with industry leaders to drive growth while meeting the world’s most pressing water needs."

Pentair Residential Filtration will serve as the primary sales channel for Pentair’s and GE’s respective global residential water filtration and water softener businesses. It will also serve as the manufacturing arm for residential and commercial tanks, valves and some limited filtration products for the parent companies.

Pentair and GE will continue to serve existing municipal, commercial and industrial water treatment customers separately, sourcing select products from the joint venture as needed.

Pentair Residential Filtration will bring together approximately 1,100 employees from Pentair and GE in 15 facilities in the United States, Europe and China. The joint venture coming to southeastern Wisconsin is another win for the region’s growing identity as the "Silicon Valley of water technology." The Milwaukee 7 and Milwaukee Mayor Tom Barrett are promoting the region as the "Fresh Coast."

"It’s absolutely true that there is a growing need around the world in advanced drinking water quality," Mellody said. "Water scarcity is increasing. Water quality is decreasing."

Chicago investors acquire Midland Container
Chicago-based Arbor Investments has completed its acquisition of Midland Container Corp. in Franksville, Wis. Midland produces value-added corrugated packaging and display products. In conjunction with the acquisition, Arbor operating partner Sieg Buck, a former senior executive for Newell-Rubbermaid, has been named chief executive officer of Midland. The current management team will continue in their respective roles with the company.  Financial terms of the acquisition were not disclosed.

Founded in 1947 by the Gerlach family, Midland manufactures corrugated shipping containers, custom-designed industrial packaging and full-color point-of-purchase displays.  The company also provides an array of value-added services in structural design, front-end creative design, just-in-time (JIT) inventory management, packout and fulfillment.

"We are excited to be acquiring a company the caliber of Midland Container," said Arbor vice president Richard Boos. "Midland’s outstanding reputation as a market leader in product quality and service provides the ideal foundation for accelerating the Company’s growth."

Arbor Investments is one of the only private equity firms in North America that solely invests in the food, beverage and related industries. The firm has $236 million of capital under management across two private equity funds. Boos said Arbor anticipates future growth for Midland. "Employees and facilities will grow with the company," Boos told SBT. "We feel that it’s a great platform for growth.”

Midland Container represents Arbor’s second investment in a Wisconsin-based company.  Previously, Arbor owned and then sold its interests in Mexican Accent Inc., the manufacturer of Manny’s branded tortillas, located in New Berlin. Arbor remains interested in making investments in other Wisconsin companies, Boos said. "We’re always interested in something nearby, given our location in Chicago," he said. "And the area (Wisconsin) is a big interest. It’s got a lot of food and beverage (companies)."

"Our partnership with Arbor will be a tremendous asset to the company going forward" said John Grow, chief operating officer of Midland. "Arbor brings a full complement of strategic, financial and operational resources to bear as we seek to build on our historically strong presence in the food and beverage packaging segment."

Fiserv to shed insurance businesses
Fiserv Inc., Brookfield-based provider of information technology services to the financial and insurance industries, has signed a definitive agreement to sell 51 percent of its interests in its insurance businesses to Trident IV, a private equity fund managed by Stone Point Capital LLC. Trident will invest approximately $205 million in equity and $335 million in debt in the transaction.

Fiserv expects to receive approximately $510 million in net after-tax proceeds and to retain a 49 percent equity interest in Fiserv Insurance Solutions. The transaction is anticipated to close in July, subject to regulatory approval and other customary closing conditions.

The transaction will include nearly all aspects of Fiserv’s insurance segment. The current management team and employee base will continue with the company, which will be known as Fiserv Insurance Solutions Inc.

“Stone Point Capital brings a proven track record of insurance industry success that we believe will accelerate the growth opportunities for Fiserv Insurance Solutions and its clients," said Jeffery Yabuki, president and chief executive officer of Fiserv. "Within Fiserv, we are able to free up capital, maintain an interest in Fiserv Insurance Solutions that should increase in value, and intensify our focus on delivering products and services within the broad financial services and payments landscape."

"We are delighted to partner with Fiserv and the management team of Fiserv Insurance Solutions," said Chuck Davis, CEO of Greenwich, Conn.-based Stone Point Capital. "Fiserv Insurance Solutions is a leading player in the insurance technology and outsourcing space. We believe there are a number of exciting growth opportunities for the business, and we look forward to working with the Fiserv Insurance Solutions management team to pursue these growth initiatives as an independent company focused on serving the insurance marketplace. We are also pleased that Fiserv will be continuing its involvement, through a significant minority ownership position, which we believe will further enhance the company’s prospects for success."

"Stone Point Capital’s business philosophy and culture match our own," said Mark Damico, president and CEO of Fiserv Insurance Solutions. "The entire Fiserv Insurance Solutions management team is excited to go to market with a partner with deep insurance sector expertise. Stone Point Capital recognizes our commitment to employees as well as clients and, through our partnership, we will continue to provide innovative solutions for years to come."

Fiserv expects slight 2008 earnings dilution of less than 1 percent, or 2 to 3 cents per share. In a related action, the Fiserv board of directors authorized the repurchase of up to an additional 10 million shares of Fiserv common stock, or approximately 6 percent of its outstanding shares. The company has completed its previous repurchase authorization.

"We continue to view share repurchase as an important element in building shareholder value through capital allocation," Yabuki said. "Our strong free cash flow combined with significant proceeds from dispositions in 2008 allows us to meet our debt commitments and to repurchase shares under this new authorization."

West Bend mutual banks to merge
West Bend Savings Bank and Continental Savings Bank, two mutual community banks, jointly announced the companies will merge to create a new Wisconsin bank with more than $650 million in combined assets and 27 locations serving southeastern Wisconsin. A name for the new bank will be determined upon completion of the merger.

"It’s a very proud day for both organizations," said Jim Podewils, president of Continental Savings Bank. "This is the first merger between two mutual savings banks in Wisconsin in over eight years. This partnership will allow us to offer a greater depth of products and services to our customers, while allowing us to retain our community philosophy of friendly customer service."

Ray Lipman, chief executive officer of West Bend Savings Bank, said, "This is a wonderful opportunity for both banks. When Jim and I began meeting in February 2007, we quickly saw the advantages that this combination provides to both organizations."

Upon completion of the merger in late 2008, the combined bank headquarters will be located in West Bend, while the bank will maintain a regional office in Greenfield. Lipman will become chairman and CEO and Podewils will be president and chief operating officer. Current employees and officers of both institutions will retain their employment with the new bank. West Bend Savings Bank was formed in 1926 and has 18 branches.

Continental Savings Bank was formed in 1914 and seven branches, including East North Avenue, Lincoln Avenue and West Villard Avenue in Milwaukee, as well as offices in Brookfield, Brown Deer, Hales Corners and Mukwonago.

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