Ron Simon has struck his second big deal for a maker of household cabinets.
Two decades ago, Simon first sold Perma-Bilt Industries, a cabinetmaker founded by his father, to an Australian company.
Simon remained as a director but abruptly left in 1989 after Perma-Bilt’s new owners rejected his plan to compete with emerging Taiwanese rivals.
He went on to form Newport Beach-based RSI Home Products Inc., now the largest maker of bathroom cabinets for home improvement stores and homebuilders.
Perma-Bilt went out of business as RSI began to take off.
Now Simon has sold half of RSI to Toronto-based private equity investor Onex Corp.
Unlike the Perma-Bilt sale, Simon and RSI’s managers will continue to run RSI and own the other half of the company.
Onex paid $318 million in October for its stake in RSI. The investor usually doesn’t acquire partial stakes in companies but made an exception for RSI.
“We’re making an investment in Ron,” an Onex executive said.
Notable Today
The deal is notable for its size at a time when few big deals are going through amid the financial crisis. Onex’s move also raised some eyebrows given the depressed state of the housing and remodeling markets, which drive RSI’s business.
In 2006, when homebuilders still were putting up homes and more owners were remolding, RSI had sales of $560 million.
For the 12 months through June, it had sales of $510 million, according to RSI.
Onex, which manages about $7 billion in investments in restaurants, healthcare, electronics and other industries, bought a stake in RSI with an eye toward the housing market’s eventual recovery, managing director Anthony Munk said.
“The company’s manufacturing expertise, high customer service levels and conservative capital structure position it well to gain market share and benefit from the eventual recovery in the repair and remodeling industry,” Munk told analysts in a conference call.
RSI operates more than 3 million square feet of manufacturing and warehouse space with about 5,000 workers.
The company’s plant in Anaheim has 600 workers and 674,000 square feet of space, massive by Orange County standards. RSI also has locations in Kansas, North Carolina, Mexico and China.
In a 2007 Business Journal story, Simon attributed RSI’s growth to the company’s culture, which stresses constant cost cutting on quality products.
Simon was born in Los Angeles to immigrant parents,his mother was from Russia, his father from England.
“I’m fortunate to have come from a poor immigrant family because it taught me the value of discipline and hard work at an early age,” Simon said in 2007.
Philanthropy Push
Philanthropy is big for Simon these days. Some of the proceeds of the RSI stake sale are likely to find their way to his Ronald Simon Family Foundation.
The foundation helps students and families who want to make it on their own by preparing them for college.
His daughter, Kathy Simon Abels in Atlanta, and son Steve Simon in Santa Fe, N.M., run branches of the foundation.
The foundation has given away more than $7 million in scholarships since 2003.
The six-year scholarships start in a student’s junior year of high school and include a computer, test preparation courses, tutoring, college application coaching and life skills and leadership training.
“I don’t want to just write checks and tell the students to do their best,” Simon said. “I want our foundation to be very hands
on and to provide scholarship recipients with these needed tools to allow them to be very competitive when they reach college.”
