In December 2012, Potpourri Group, Inc. - a portfolio company
American Capital Ltd.
) - acquired Cuddledown, Inc., a major multi-channel retailer of
high-end bedding related merchandise. American Capital invested
in Potpourri Group, back in 2005.
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Founded in 1973, Yarmouth, Maine-based Cuddledown vends
high-quality synthetic and down-filled comforters, pillows,
sheeting as well as sleepwear.
Potpourri is a well-known multi-brand direct marketer, offering
wide-ranging products in distinctive home furnishings, casual
apparel, gifts and unique accessories online as well as through
The merger is going to be a positive step for Potpourri since
Cuddledown boasts diverse mix of products and has proficiency in
the high-end bedding business. It will provide Potpourri the
prospect to flourish in the bedding-product segment as well.
Management at Potpourri has considerable expertise in effectively
integrating different brands into its portfolio, resulting in
organic revenue growth and significant expense savings. The
amalgamation of Cuddledown is further anticipated to add to
Potpourri's future growth due to its similar consumer base and
wide product range.
American Capital is a publicly-traded private equity firm and
global asset manager. Directly and through its asset management
business, the company initiates, underwrites and manages
investments in middle-market private equity, leveraged finance,
real estate and structured products.
American Capital is capable of providing flexible financing
solutions ranging from a variety of senior debt and uni-tranche
to mezzanine and equity co-investments. Further, American Capital
provides multi-currency funding with underwriting platform
globally, thereby boosting its portfolio companies. Such benefits
provided by the company compel private equity clients to consider
it as an investment partner, which in turn, helps it diversify.
Though the improved portfolio performance is expected to continue
with the economic recovery, we believe that the low interest rate
environment along with global cues might act as headwinds in the
Shares of American Capital currently retain a Zacks #4 Rank,
which translates into a short-term Sell rating. Among its peers,
KCAP Financial, Inc.
) retains a Zacks #1 Rank (Strong Buy).