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Tom Pepin, CEO of Pepin Distributing Co., says a Maryland-based firm has invested in the business his family has owned for decades — but disputes published reports the business has been sold.
Pepin, in an email to the Business Observer July 14, categorized the investment by Redwood Capital Investments in the Tampa-based company as “more of a capital restructuring that will infuse capital to fund growth.”
This influx of new money, he writes, will help the company — a leader in selling Anheuser-Busch products in the Tampa Bay region for several decades — strengthen its competitive position as well as improve service and product availability. He declines to disclose the size of the investment.
Pepin wrote the Business Observer a day after a company spokesman didn’t respond to questions about news the company had been sold. In the email, Pepin strongly refutes those stories, writing that the “headlines have been misleading.” While not referring to a specific story, the Tampa Bay Business Journal, the Baltimore Business Journal, where Redwood is based, and the Tampa Bay Times all published articles that called the deal a sale.
“It is important to differentiate between a sale and an investment,” he writes. “Redwood Capital bought an investment in Pepin Distributing…Pepin will remain Pepin and operate as it has for 50 years as an integral part of the community.”
Pepin followed up the July 14 email two days letter with another email. In the July 16 email, he said Redwood was "not too happy with the articles that have come out and asked that we not engage further."
He went on to say that Redwood Capital was not a private equity firm.
"They do not raise funds and flip companies," he wrote. "Redwood Capital Investments is the holding company for a diverse group of businesses that are owned or that have partnered with James Davis. Mr. Davis partners with high quality companies that are looking to grow and reinvest in their businesses."
Davis, according to The Maryland Daily Record, is chairman of the Allegis Group. The company, which he founded in 1983, is a staffing company with offices on four continents and annual revenue of about $12.3 billion. He is also a co-owner of baseball's St. Louis Cardinals.
On its website, Forbes magazine lists Davis' net worth as of July 16 at $3.4 billion, good for No. 891 on its World's Billionaires List for 2021. His cousin, Stephen Bisciotti, is owner of the Baltimore Ravens and is No. 574 on Forbes' list, with a net worth of $4.9 billion.
"They are also known for their philanthropic efforts in the respective towns that they invest in and have pledged to continue the community work that Pepin has done in Tampa," Pepin says in the July 16 email.
The difference between the headlines and what Pepin asserts may just be semantical, though.
Attached to the email were two letters sent to employees — the first on Tuesday July 6 and the second on July 13.
In the July 6 letter, Pepin tells employees that “this transaction will result in a change in the ownership structure of Pepin Distributing Company but not in culture (sic) that we have built.”
Pepin, in responding to a follow-up email from the Business Observer asking him to explain the meaning of “change in the ownership structure,” wrote that all he could say is "that Redwood will most likely invest more in the future." Questions that linger include the percentage ownership stakes each entity, Redwood and Pepin, will have after the deal.
Either way, the change in the ownership structure phrase seems to have been what sparked confusion among some employees and likely what led to the reports of the sale.
Pepin admits as much in the July 13 letter to employees where he writes “I want to clarify a few items.”
Referencing the July 6 letter, Pepin writes on July 13 that “we sent out the internal communication below to assure you that this transaction will not be disruptive to our company culture or to you personally. To the contrary, this investment will enable us all to grow and prosper. I ask that you read it again.”
Pepin Distributing was founded in 1961 in Gainesville by Tom Pepin’s father, Art. The company bought the distribution rights to Anheuser-Busch products for the Tampa market in 1967.
Tom Pepin bought the business in 1981. At the time, he says the company had 180 employees, one supplier, four products, 26 packages and sold 4.5 million cases. Today, the company, based on N. 50th St. in Tampa, has grown to 380 employees, 80 suppliers, 600 products, 1,800 packages and sold more than 10 million cases.
In June, the company reported to the Business Observer that revenue in 2020 grew 3.6% to $201 million.
Pepin says “his leadership role in the company will not change.”
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