Oriental Trading Sold

Jun 14, 2006 3:33 AM  By

Washington-based private equity firm The Carlyle Group has agreed to buy the majority of Oriental Trading Co., an Omaha, NE-based gifts and novelties cataloger, from Los Angeles-based Brentwood Associates. Terms of the transaction, which is scheduled to close in the third quarter, were not released. Brentwood will retain a “significant” minority stake—reported by Reuters to be 25%–in the company, which it purchased in 2000.

Oriental Trading CEO Steve Frary tells MULTICHANNEL MERCHANT that he is excited about the deal for everyone involved. “Carlyle is a great firm,” he says. “They are one of the largest private equity firms; they have a global presence and a lot of resources.”

Carlyle hasn’t indicated that there would be any changes to the business, Frary says. “We will continue to run the business the way it has been run… They’re big fans of the company and supportive of what we do and what we’ve done.”

“We think it’s a great business,” says Mike Grant, managing director for New York-based strategic consulting firm Winterberry Group, which provided business diligence advice to The Carlyle Group before the transaction was finalized. “Part of what we saw was a free cash flow that is very attractive to the private equity community. It’s a very strong brand with 40 years of successful merchandising innovations. And for any cataloger or multichannel marketer, that’s one of the linchpins of success.”

Founded in 1932, Oriental Trading is one of the nation’s largest direct marketers of party supplies, novelties, toys, and arts and crafts supplies. The company has more than 18 million customers on file, mails 300 million catalogs annually, operates three Internet Websites, and offers more than 25,000 product SKUs. In addition to the flagship catalog, the company mails Hands on Fun, which caters to teachers; Terry’s Village, which sells gifts and home accents; Sensational Crafts; and Inspirations, which sells religious-themed items.

Oriental Trading is the first cataloger purchased by Carlyle, notes Stuart Rose, managing director of Wellesley, MA-based investment bank Tully & Holland. said Carlyle is a very well known private equity group that works in a number of industries. In March, along with Bain Capital and Thomas H. Lee, two of Boston’s largest buyout companies, Carlyle bought Dunkin’ Brands—which includes Baskin-Robbins ice cream and Togo’s sandwich shops as well as Dunkin Donuts—for $2.43 billion.

“The deal shows that the industry continues to be attractive to private equity groups,” Rose says. “While this is being sold from one private equity group to another, it demonstrates the desirability of catalog companies, especially large, successful ones like Oriental Trading.”