Bain agrees E1.4bn Brenntag acquisition

Using funding arranged by Citigroup and Goldman Sachs, Boston-based equity house Bain Capital has beaten rivals to acquire Brenntag, the chemicals distribution business sold by Deutsche Bahn.

Boston-based international private equity firm Bain Capital has confirmed that it is acquiring Brenntag, the chemical distribution company sold by Deutsche Bahn. Interfer, a steel distributor, will also change hands as part of the acquisition.

 

The agreement comes at the end of what Freshfields, the law firm advising the vendor, described as a “limited auction process”. Among the private equity suitors that have been linked to the Brenntag sale are CVC Capital Partners and The Blackstone Group, which earlier this week acquired Sulo, a German waste manager, in a E700m transaction.

 

'Brenntag is well-positioned to take advantage of the expected cyclical upturn in the industry and to benefit from industry trends that favor scale distributors,” said Ulrich Biffar, Munich-based managing director at Bain Capital, in a statement.

 

The transaction, subject to approval from the cartel authorities, is expected to complete in the first quarter of 2004.

 

According to a source close to Bain, the firm was attracted to Brenntag in part as a result of the global presence of the Germany-based companies. Some 35 per cent of the group’s revenues originate from North America, the source estimated, with another 10 per cent coming from Latin America.

 

Once complete, the Brenntag purchase will take to eight the number of transactions that Bain has done in Europe in the past 18 month. It will be the firm’s third investment in Germany, following the acquisition of TV operator ProSieben (alongside US entrepreneur Haim Saban) earlier this year and Jack Wolfskin, an outdoor equipment maker in 2002.

 

Bain managing directors based in Boston, London and Munich were closely involved in the transaction, the source said, reflecting the geographic complexity of the deal.

 

Debt funding was arranged by joint lead underwriters Citigroup and Goldman Sachs, with Dresdner Kleinwort Wasserstein and Société General also part of the syndicate.

Ashurst Morris Crisp acted as legal advisor for Bain.