Caradon

Activity
Building plastics
Acquired
Sep 1985
Realised
Jun 1987
Sector
Industrials

In September 1985 Reed International divested itself of its building products division, as part of its strategy to concentrate on its core publishing and paper activities. Reed Building Products had a number of trading divisions involved in manufacturing plastic plumbing and drainage products, window fitments, shower equipment, plastic mouldings for industrial and domestic uses, and sanitary and bathroom fittings. A buyout by management, supported by Cinven, won the mandate for the sale and renamed the business Caradon.

Strategy
The management’s strategy was to pursue cost savings and operational efficiencies. With the construction industry in the doldrums at the time of the buyout, the management planned to prepare the business for more buoyant market conditions in the future. Both sales and profit projections were for steady growth for 2 years followed by a period of more rapid expansion.

Outcome
By 1987 the business had developed according to plan and the construction sector was in better shape. Caradon was successfully floated on the London Stock Exchange in June of that year.

Multiple returned on original investment: 6.7x