An East Coast Terminalling Company Finding competing buyers for a business that needed a new business model
A terminalling company based in Georgia was established in 1978 to offer bulk loading capabilities for kaolin clay mined and processed in the state of Georgia for export to Europe and Asia. A major Japanese conglomerate had acquired the terminalling company to support its business of marketing kaolin clay to Japanese paper makers throughout the globe. By early 2000, new sources of kaolin developed in Brazil and China had reduced demand for Georgian kaolin. The Japanese conglomerate had rendered the terminalling company non-strategic and put the business up for sale.
The Japanese conglomerate had previously attempted to divest itself of the terminalling company, but had failed to find a buyer. There were significant roadblocks to the sale of the company. Though the company remained profitable, earnings had declined three years in a row. The demand for Georgia’s kaolin was not expected to rebound and the company was about to lose one of its largest customers. The Japanese conglomerate hired Republic Partners at the end of 2007 and charged the Firm with closing a sale during the first quarter of 2008.
Republic Partners’ Solution
Preparing the company for sale, Republic Partners found that it was located in one of the fastest growing ports on the Atlantic seaboard. There was significant demand for bulk import and export services at the terminal; but in order to capitalize on this market, the company needed to stop handling kaolin clay, which can be easily contaminated when it is handled in close proximity to other materials.
Although Republic Partners contacted all potential investors, including major port and terminal operators, adjacent businesses, and major investors in the region, it recognized that the highest bidder potentially would be a terminal operator that values establishing a presence in a key East Coast location. Republic Partners marketed the company actively to terminal operators for its key strategic location and core capabilities. Within two months, two major terminal operators were competing to purchase the company. The winning bid allowed the parent company to sell at near breakeven, when just months earlier it faced shutting down operations at a significant loss.