Thyssenkrupp on Thursday, February 27, announced it agreed to sell its elevators division to a consortium of Advent, Cinven and Germany’s RAG foundation for €17.2 billion (US$18.7 billion) in what could be the world’s largest buyout this year, reported the Wall Street Journal.
The bidding group prevailed against a rival consortium comprising Blackstone, Carlyle, and the Canada Pension Plan Investment Board, which sources said submitted a lower offer.
The deal, Europe’s biggest buyout since 2007, values the division at roughly 18 times core earnings, a person familiar with the matter said. It is expected to close at the end of the second quarter.
The price beats the most optimistic estimates and roughly matches a bid that had been submitted earlier in the process by Finnish rival Kone, which dropped out of the race earlier this month over expected antitrust risks.
Thyssenkrupp stated it would reinvest about €1.25 billion euros to take a stake in the unit, which, based on the purchase price, would result in a 7.3% share that would be used to partially fund its pension liabilities in a trust.
“With the sale, we are paving the way for Thyssenkrupp to become successful. Not only have we obtained a very good selling price, we will also be able to complete the transaction quickly,” Thyssenkrupp chief executive Martina Merz said in a statement.
“It is now crucial for us to find the best possible balance for the use of the funds.”
The decision followed a meeting of Thyssenkrupp’s management and supervisory boards, ending the closely watched saga. The group said it is aiming for an investment grade rating following the deal, while it is currently rated junk by credit agencies.
Full Content: Wall Street Journal
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