SAN CARLOS — A Bay Area paint company that’s operated as an independent business for three-quarters of a century has been bought by a private investment group in a deal that positions the paint firm for plenty of growth.
Kelly-Moore Paints, a 1,200-employee company with more than $400 million in revenue that was founded in 1946, has been bought by Flacks Group. Flacks is an investment firm with assets topping $2 billion that seeks to buy companies whose brands are viewed as out of favor.
The deal erased a significant debt burden for San Carlos-based Kelly-Moore Paints and places the company on a path for growth and expansion, according to Charles Gassenheimer, managing director with Flacks Group.
“We are interested in growth for Kelly-Moore,” Gassenheimer said. “This was an extremely opportunistic transaction that will allow for tremendous growth and scale going forward.”
The deal ends 76 years of independent ownership of Kelly-Moore, one of the Bay Area’s best-known paint brands. Kelly-Moore has 109 stores in California and 63 in the Bay Area. The company manages 157 stores in North America.
“We will have the resources and ability to continue to innovate and deliver the best products and experiences to our customers in the professional paint industry and remain highly competitive in the marketplace” with the new ownership structure, said Steve De Voe, chief executive officer of Kelly-Moore Paints.
Kelly-Moore and Miami-based Flacks Group didn’t disclose the terms of the transaction.
“Since 1946, the company’s high-quality products have exemplified American manufacturing and its exceptional service has earned the company a loyal customer base,” Gassenheimer said in discussing the purchase of Kelly-Moore Paints.
Based on its mission statement, Flacks Group will likely undertake a turnaround at Kelly-Moore. The way this might be accomplished, in Kelly-Moore’s case, wasn’t immediately revealed.
“Flacks Group specializes in the acquisition and operational turnaround of medium-sized businesses,” according to a post on the investment firm’s website. “Flacks Group invests in companies with heritage brands that operate businesses often considered out-of-favor for a variety of reasons.”
In the case of Kelly-Moore Paints, Flacks Group appears to wield maximum flexibility with its purchase because it bought the paint retailer, distributor and manufacturer in an all-cash deal.
The new owner will likely make maximum use of the paint company’s manufacturing complex in Texas. A few years ago, Kelly-Moore shut a manufacturing center in the Bay Area.
Another potential growth point is the Kelly-Moore distribution complex in Union City, according to Gassheimer.
“The engine is the Texas manufacturing facility but 75% of the revenue results from the distribution center in Union City, which is the key to our store network in California,” Gassheimer said.
The new owners of Kelly-Moore intend to use the paint company as a platform to add more acquisitions to the retailing firm, which would enable more growth and a wider reach.
“We have no outside investors and we have no pressure to respond to outside investors,” Gassheimer said. “We are going to focus on the needs of the business and make decisions that are based on what is best for the business.”
