Private equity firm MiddleGround Capital announced Nov. 21 that it had closed on a new fund vehicle, MiddleGround Carbon CV, L.P., which provided the firm with the funds to purchase metals distributors Banner Industries and A.M. Castle & Co. (known as Castle Metals) which MiddleGround is merging into a combined entity.
MiddleGround originally purchased Carol Stream, Illinois-based Banner in 2019, and acquired Castle earlier this year. MiddleGround Carbon CV has about $440 million in capital commitments that provided the capital for those purchases.
Middleground said the CV allows the firm to extend its ownership of Banner and support a merger between it and Castle, creating what the firm touts as a global leader in the metals distribution space.
Following the transaction close, Banner and Castle will continue to operate as independent brands, while benefitting from the additional resources, expanded geographic reach and complementary product offerings under a single capital structure, MiddleGround said.
“This transaction is a strong step forward for both Banner and Castle and with the ongoing support provided by MiddleGround, the combined company is well-positioned to enter the next phase of growth,” said Ryan McComb, Director and the lead of the transaction team for MiddleGround Carbon CV, in a news release. “Not only will the merger allow for operational improvements and geographic expansion opportunities for both Banner and Castle, it will also have no impact on current customer relationships or product offerings.”
The combined company will be led by industry veterans Dan Stoettner and Dan Lewis, who will serve as CEO and CFO, respectively.
“This is a natural fit given that Banner and Castle have long been recognized for their unparalleled metals expertise across the medical, industrial, and aerospace sectors,” Stoettner added. “Through this combination, we will be better equipped to meet the evolving needs of a variety of industries.
Banner is a processor and distributor of metal bar products for a diverse set of industrial and medical end markets, while Castle is a provider of metals, services and supply chain solutions serving industrial and aerospace customers.
Middleground detailed that under Stoettner’s leadership, Banner has gone from a little over $100 million of revenue and about $9 million of EBITDA in 2019, to more than $350 million in revenue and $55 million in EBITDA over the last 12 months.
Castle, meanwhile, was a publicly traded company until 2020, and MiddleGround said the company has been on its “watch list” for years. Castle has a global footprint and about $600 million in annual revenue with $50 million in EBITDA.