News: Deals – June 2002

News: Deals 2002-06-01 Staff Writer <b>Cinven acquires NCP</b><br />UK private equity firm Cinven has won the race to acquire NCP, the UK national car park business that was put up for auction by its parent company Cendant. Cinven will pay Cendant £820m for NCP - in line with analyst predic

Cinven acquires NCP
UK private equity firm Cinven has won the race to acquire NCP, the UK national car park business that was put up for auction by its parent company Cendant. Cinven will pay Cendant £820m for NCP – in line with analyst predictions of a price in excess of £800m – although lower than Cendant’s original asking price of £1bn.

According to a source familiar with the auction process, Cinven secured the deal because it was able to produce ?a more deliverable offer?. Cinven’s deal involves the creation of a holding company, Parking International, which will acquire NCP with Royal Bank of Scotland providing debt for the acquisition.

RBS’ effort to arrange financing for the deal was led by the group’s head of structured finance, Leith Robertson. The bank has fully underwritten the transaction and arranged a bridge loan to finance it. It will pass on most of the assets to Cinven once it is cleared by the regulator. Royal Bank Private Equity is to retain a minority stake in NCP. A sale and lease-back exercise will be used to refinance the deal.

The acquisition of NCP represents the second largest LBO transaction this year. The deal is also significant because of the unusually competitive nature of the auction, co-ordinated by JP Morgan, which reflects to an extent the paucity of quality opportunities for larger buyout firms. The competitive nature of the bidding will have ensured that Cendant received a decent valuation for NCP.

Easyjet lands Go for £374m
UK private equity firm 3i has completed the rapid exit of low cost airline Go after Easyjet agreed to pay a total of £374m for the firm acquired by 3i last year. The price represents an enterprise value of £257.6m, after taking into account £116.4m of net cash on the Go balance sheet as at 31 March 2002.

The sale of Go is seen as one of the most successful exits for 3i in its long history. The £374m sale is slightly below analyst estimations of £400m, but still represents a massive return on the £110m paid for the firm in August 2001.

The deal has been completed without the support of Go’s management, particularly chief executive Barbara Cassani, who has said that the future of Go ?would be best served? by an initial public offering that would allow it to maintain its independence rather than being taken over in a trade sale by its rivals.

Nevertheless, Cassani described the deal as a ?tremendous compliment? to the Go management’s performance since starting up four years ago. It has been reported that the sale to Easyjet will make millionaires of more than 20 of Go’s management, who received a 22.5 per cent stake as part of the MBO last year.

Catalunya acquires stake in BPEP España
Caixa Catalunya has acquired a 45 per cent stake in Baring Private Equity España (BPEP España) and will provide a cornerstone investment in BPEP España’s future fund raising. BPEP España is currently putting the finishing touches to its new €100m Iberia fund (see Private Equity Market Intelligence for details) which is due to launch later this year.

As part of the deal, BPEP España will manage parts of Caixa Catalunya’s direct private equity investment portfolio in Spain. Caixa Catalunya is already a major investor in the €E60m Baring Iberia I Fund which was launched in 1999 and is close to being fully invested.

BPEP España currently manages Spanish funds worth more than €80m. In addition to Caixa Catalunya, investors in the Baring Iberia I Fund include three Spanish savings banks (Caja Duero, Caja Asturias, Caixa d’Estalvis de Terrassa), a Portuguese savings bank (Montepío Geral) and the European Investment Bank.

BPEP said the deal was the final piece in the firm’s drive to cover the Iberian peninsula. ?The link-up with Caixa Catalunya will give a presence in the Catalunya, Spain’s most important industrial region.?

Advent in German pharma LBO
Advent International has completed a €375m LBO of Viatris, a German pharmaceuticals and licensing firm based in Frankfurt. Advent acquired the firm from Degussa, which has now completed its strategy of disposing of its non-core pharmaceutical operations. The €375m purchase price included an unspecified tranche of debt.

Viatris, formerly Asta Medica, has operations across Europe, with manufacturing facilities in Austria, France, the Netherlands, and additional facilities in the USA and Brazil. The firm operates in four areas: respiratory and allergy, dermatology and hygiene and metabolic regulation. The firm reported turnover of €483m in 2001.

Hicks, Muse gets Nestlé food brands
Hicks, Muse, Tate & Furst has acquired a number of non-core food businesses from Nestlé for an undisclosed sum, believed to be in the region of £100m. The deal will see Hicks, Muse portfolio company, Premier International Foods, acquiring a range of Nestlé brands, including Crosse & Blackwell, Branston Pickle and Gale’s honey.

Hicks, Muse has won the race to acquire these brands ahead of reported competition from Doughty Hanson and Electra Partners. Last year, Nestlè’s Ambient Food Businesses generated sales in excess of £100m.

Lyndon Lea, partner at Hicks, Muse, said he believed the acquisition marked a major strategic step forward for Premier International Foods. ?The deal will provide Premier International with further critical mass and will enable us to develop and support our existing brands.?

Emerald fund leads IT MBO
PM & Partners has completed a management buyout at AIVE, the IT consulting firm based near Venice. PM & Partners completed the deal through its €215.5m Emerald Fund, a private equity fund focusing primarily on domestic venture capital investments. Emerald acquired just over 38 per cent of the shares in AIVE for around €10m. The other two financial investors, each with a 19.2 per cent shareholding, are Luxembourg-based Athena Private Equity and Prudentia, which is managed by Fidia (a fund controlled by Mediobanca, Intesa BCI, Unicredit and Banca di Roma). The two vendors will retain a 23 per cent stake in the firm.

CVC buys into Dutch retail
CVC Capital Partners has reached agreement with Vendex KBB, the Dutch non-food retailer, over the acquisition of six retail chains based across the Netherlands. The total price is €394m for the six retailers, of which €10m is deferred. The combined turnover of the six companies was €714m for the last financial year. ABN Amro has provided debt facilities for the acquisition.

Doughty Hanson in Priory MBO
Doughty Hanson is leading a management buyout at the Priory, the chain of psychiatric healthcare clinics controlled by Westminster Healthcare. The deal will represent the final part of the disposal program that saw 3i acquire Westminster’s care homes business earlier this month (see this section). Westminster Healthcare is currently owned by Whitehall, a fund managed by Goldman Sachs and New York-based Welsh, Carson, Anderson and Stowe.

ABN AMRO completes publishing MBO
European private equity firm, ABN AMRO Capital, has backed the management of British European Associated Publishers (BEAP) in acquiring the firm from Finnish media group Sanoma Magazines. BEAP is a Surrey-based publisher of puzzle magazines and has a 50 per cent market share in the UK. Titles published by BEAP include Puzzler and Puzzler Collection, which has a monthly circulation of 206,000. The £36.7m deal was backed by ABN AMRO Capital, which provided equity totalling £9.6m. Bank of Scotland provided total banking facilities worth £23.75m. The balance of the deal was made up by a £3m vendor loan and management investment of £0.3m.

Alchemy completes Open + Direct MBO
Viridian Group, the Northern Ireland energy firm, has completed the sale of its Open + Direct Consumer Financial Services business to a management buyout team backed by Alchemy Partners. The £111.4m price tag is likely to result in a small book loss for Viridian. This is Alchemy’s largest deal in the financial services sector, a sector which the firm has been looking to enter. It has committed £55m to organically grow the business, with the aim of doubling its size over the next three years. Alchemy has not decided on a definitive exit strategy as yet, although a trade sale is thought to be the most likely option.

3i backs Westminster MBO
3i has completed the acquisition of Westminster Health Care. 3i is to invest approximately £70m in the £267m buyout of the Surrey-based firm, and will also assume servicing of the £195m bond already issued by Westminster. 3i says its investment will allow the company to invest in new assets and services at an important time for the heath care sector.

Diamant exit for Candover
European buyout firm Candover has completed the sale of its diamond tool manufacturing interest, Diamant Boart, to Electrolux AB. The sale price of €185m (£114.5m) provides Candover with a near £70m profit on the £45m it invested in the firm just under three years ago. This is the fifth realisation for the Candover 1997 Fund. During 2000 Candover exited from ASW Holdings plc through a repayment of convertible loan notes and in 2001, Claverham, the defence and aerospace engineering business, was sold to Hamilton Sundstrand. In March this year, Candover sold PII Group, the global pipeline integrity services company, to GE Power Systems in a £310m deal, and in April, Regional Independent Media was sold to Johnston Press plc for £560m.

Alchemy takes control of CompAir
UK turnaround specialist Alchemy Partners has acquired the air and gas compression systems business from Invensys for a nominal fee. It is understood that Alchemy paid £2 for CompAir, which generated sales of £205m for the year to March 2002. The business, which made a loss of £12m for the same period, is the latest in a series of disposals for the energy management group. Since September 2001, Invensys has undertaken a series of disposals totalling £750m as it looks to pare back its debt pile which had reached £3.3bn late last year. Invensys will retain an 18 per cent stake in the firm.

Yell to go for IPO
Yell, the UK directories business controlled by Hicks, Muse and Apax, has elected to proceed with a £750m initial public offering this summer, dispelling reports that the firm had opted to hang fire on a listing until later this year. The listing will comprise the sale of new shares, which the firm hopes will raise £750m for the repayment of debt as well as providing the firm with capital for possible acquisitions. Goldman Sachs and JP Morgan have been appointed as joint global coordinators and joint bookrunners to the offer.