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Apax pulls Xerium secondary sale

The UK private equity firm has abandoned plans to sell off its Xerium paper products business after a sharp fall in the company’s valuation.

Apax Partners has been forced to cancel plans to sell its US paper manufacturing business after two bidders sharply reduced their offers for the company.

 

Apax had reached agreement with US private equity firms JP Morgan Partners, which already owns a stake in the company, and Warburg Pincus to sell Xerium, which supplies products to the paper manufacturing industry, for $970m, according to Reuters. The consortium subsequently cut its offer by $45m, forcing Apax to shelve plans for a sale.

 

Apax was originally seeking a price in the region of $1bn to $1.5bn, against the $810m it paid for the business in October 1999.

 

The report suggests that Apax will now provide the business with further financing, increasing Xerium’s overall debt pile from $450m to $750m. J.P. Morgan and Warburg Pincus were planning to finance the offer with about $750m of debt and $220m of equity.

 

Xerium, which was previously owned by Invensys, was also the subject of bids from other private equity firms including Thomas H Lee Partners and Blackstone Group. The Massachusetts-based business generates annual sales of around $600m. JP Morgan Partners will continue to hold a minority stake in the business. Previous owner Invensys holds ten per cent.

 

Apax declined to comment on the report.