Streetsboro-based toy company Step2 has been sold, but it is growing and staying put, its leader said Tuesday afternoon.
The toy and home and garden products company has been acquired by New York-based Aterian Investment Partners. The company was owned by Ares Capital, a specialty finance company that owns Neiman Marcus.
As part of the acquisition, Aterian is also purchasing Backyard Discovery in Pittsburg, Kan. Backyard Discovery makes large wood playsets, playhouses, patio products and sheds.
In an exclusive telephone interview, Step2 Chief Executive Officer Chris Quinn said the new company would remain headquartered in Streetsboro with him at the helm. The CEO of Backyard Discovery, David Thornhill, will continue to operate his division of the company in Kansas and report to Quinn, 52.
“The good news is combined, we won’t quite double our size, but we will be significantly bigger in scale,” said Quinn. “This is going to give us a tremendous opportunity to continue to be even more productive and at the same time innovative as we really harvest the capabilities of both organizations.”
Quinn said the two companies have complementary products and “we’re not going to be tripping over ourselves in terms of lineup. They’re woods craftsmen and we’re craftsmen of rotational mold products. That’s the big gain here. It’s a broader portfolio.”
Step2 specializes in large plastic toy products such as kitchens, playsets, ride-on toys and beds, as well as home goods such as mailboxes.
The transaction was effective at noon Tuesday, Quinn said. He declined to provide any financial details.
The combination of the companies will enable the larger company to address a larger consumer set, Quinn said.
“This enables us to use wood in a bigger platform that we couldn’t previously use. This is where it gets really exciting. We can be much more creative in blended materials,” he said.
Step2 employs 800 people in Streetsboro and Perrysville in Ashland County. Quinn said he could not disclose how many employees Backyard Discovery had, but that the combined company would grow the overall company “significantly by nearly 50 percent.”
Quinn said he did not anticipate any Backyard Discovery employees moving to Streetsboro, but did see the opportunity for more job growth in Streetsboro.
“This gives us the ability to invest further in creating jobs in Northeast Ohio. I’m excited to take this newly formed company to the next level and ready to compete,” he said.
Aterian is the fourth owner of Step2 and the third private equity firm. Step2 founder Tom Murdough sold the business to Liberty Partners in 2006. (Murdough has recently started his own new toy company, Simplay3 in Streetsboro). Ares bought the company in 2014.
Quinn said while Liberty’s and Ares’ goals were to find a successful owner for Step2, Aterian’s goal “is to maximize the value of these combined businesses on a medium to longer term basis.”
Aterian Investment Partners is a New York investment company that acquires underperforming businesses that generate $25 million to $500 million in revenue.
The Wall Street Journal in 2013 reported that two former executives from Sun Capital Partners launched Aterian.
Since then, Aterian has purchased or invested in more than a half-dozen diverse companies, including a chemical company involved with polymers, a heat-treating company in the oil and gas business and a data-driven direct marketing company.
Quinn arrived at Step 2 in January 2015.
Staff reporter Amanda Garrett contributed to this report. Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty