BC Partners set for largest German LBO

[BLOOMBERG]

UK private equity firm BC Partners has agreed a €3.5bn ($4.1bn) deal for Brenntag, a German chemical distribution portfolio company owned by rival Bain Capital. It will be the country's largest leveraged buyout to date.

The buyout will top the €3.1bn paid by private equity house Blackstone for German chemicals company Celanese in April 2004, and is BC Partners' first investment in the country for more than three years. Its last deal was the €510m purchase of cable operator TeleColumbus.

Bain paid €1.4bn for Brenntag and sister company Interfer less than three years ago and has increased sales from €4.3bn in 2003 to €5.3bn in 2005. In May, the company bought UK and Ireland distributor Albion Chemicals Group, and Swiss business Schweizerhall Chemie.

Bain's purchase of Brenntag and Interfer from German rail operator Deutsche Bahn at the end of 2003 followed a year-long auction that saw Bain win out over rival private equity bidders CVC and The Blackstone Group.

This time, however, Bain held no auction and its advisers, Goldman Sachs and Deutsche Bank, had exclusive proprietary talks with BC Partners but will retain a minority stake in the business.

BC, which was advised by Morgan Stanley, will now prepare Brenntag for an initial public offering, although the company is expected to continue its organic and acquisition-led growth in the short-term.

A listing could be made outside of Germany, a source close to the company said, as nearly half its sales were made in the Americas. A US listing would follow a similar move by Celeanese, which delisted from Germany and floated in New York less than a year later.

Freshfields Bruckhaus Deringer is legal adviser to BC Partners, after originally advising Deutsche Bahn on its exit, with Ernst & Young as BC's accountants.


25 Jul 2006