The Oklahoma Publishing Co., publisher of The Oklahoman, last week closed its largest acquisition in a decade by acquiring an equal interest in Pavestone Company LP, a Dallas-based manufacturer of concrete landscaping products. Details of the transaction, which included Pavestone’s seven subsidiaries, were not disclosed. Pavestone, founded in 1980 by CEO Robert J. Schlegel, employs more than 1,100 people and operates 21 manufacturing plants across the United States. The company’s products, which include interlocking concrete stones used as brick pavers, edgers, patio stones and retaining wall blocks as well as landscaping rock and architectural textured stone, are distributed through some of the nation’s largest retailers. Pavestone, with products sold in 40 states and available to 90 percent of the population, is one of just two national manufacturers in the concrete "hardscape” industry. Since its founding, Pavestone has generated a compounded annual growth rate of 29 percent and last year produced "several hundred million” in revenue, said Gary Pierson, OPUBCO chief operating officer. Pavestone has several strengths that attracted interest from OPUBCO and other private equity groups, Pierson said. "They are products we can be proud of,” Pierson said. "It has an existing management team we have great confidence in. It’s in a position within their industry we think allows for continued growth on top of pretty amazing growth to begin with. It’s just a very solid company with its national footprint and relationship with big vendors — Home Depot, Walmart and others.” Among the Pavestone subsidiaries is Veneerstone LP, a company Pavestone bought two years ago that produces concrete architectural products that look like natural stone but cost substantially less, Pierson said. OPUBCO was advised in the transaction by Challenger Capital Partners of Chicago. Schlegel will continue to lead the company, Pierson said. "The management that is there today is the management we intend to grow with,” he said. Schlegel said he is "excited” about working with his new partners. "It’s a breath of fresh air to run the company going forward with little or no debt,” Schlegel said. Mike Collison, OPUBCO chief financial officer, said Pavestone weathered the recent recession much better than most building product manufacturers because most of its products are used in renovation or upgrade projects rather than original construction.
PhilosophyPierson said Pavestone fits OPUBCO’s long-term investment philosophy. "We are different than private equity in that when we buy something we intend to hold it for a long time if it’s productive,” he said. "We think this is a business with a product and an industry that is not going to go away, that has steady returns and also high growth potential.” OPUBCO Chairman and CEO Christy Everest said long-term value has long been the driving force behind the company’s outside investments. "Throughout the history of the company my father (Edward L. Gaylord) and grandfather (E.K. Gaylord) before him acquired businesses in all kinds of industries at different times,” Everest said. "This investment in Pavestone just follows a long tradition. In doing so, we hope to have this business for decades to come.” Since its founding more than a century ago, OPUBCO has invested in broadcasting, mining, oil and gas, real estate development, hospitality and publishing among other industries. "We’re looking out for the second hundred years of a company that’s already been around for 107 years,” Pierson said. "That’s really our job — to diversify the company, broaden its holdings and expand it for the benefit of all the shareholders.”
Other investmentsOPUBCO also recently acquired an 80,000-square-foot bakery facility near Atlanta that will be developed over the next two years to expand the capacity of its Arkansas-based breakfast food company called De Wafelbakkers. Demand for the waffles, pancakes and French toast produced by De Wafelbakkers currently outstrips the company’s ability to produce at its North Little Rock plant, Pierson said. "Since we bought that company on Jan. 2, 2008, revenues have nearly doubled,” he said. "It’s been a real success story for us.” OPUBCO currently has investments in hotels, publishing, cable television, Internet companies, a railway, real estate and water rights.