(www.PrivateEquityCentral.net) A trio of New York-based private equity firms comprised of The Blackstone Group, Apollo Management and Goldman Sachs Capital Partners has agreed to acquire water treatment and process chemical provider Ondeo Nalco from French-Belgian energy conglomerate Suez in a transaction valued at $4.2bn.
The transaction will be funded by $3.2bn of senior and subordinated debt with the remainder funded by equity from the three firms, according to a press release.
John Ford, a spokesperson for The Blackstone Group, said all firms will contribute equally to the equity investment. He added that Blackstone originally won the auction, beating out Apollo and Goldman Sachs Capital Partners, but then invited the two firms to participate in the deal.
Ondeo Nalco is a leader in providing water treatment and process chemicals and services to companies, mainly in industrial sectors. The company has operations in 130 countries and serves more than 60,000 customers. The company had revenues of more than $2.6bn in 2002.
Suez sold Ondeo Nalco as part of a plan to improve Suez’s profitability and financial structure. The sale also reduces Suez’s debt by approximately $3.8bn, according to the release. Suez was advised on the sale by UBS and Rohatyn Associates. The sale was arranged through a competitive auction. Suez had revenues of €40.2bn in 2002.
“We are very pleased to reach an agreement with Suez, with whom we have had a long-standing relationship, to purchase Nalco,” Stephen Schwarzman, president and chief executive officer of The Blackstone Group, said in the statement. “We believe that Nalco is a world-class company with strong fundamentals and are excited about its future prospects.”
“We look forward to working in partnership with the investor group and Nalco’s management and employees to assist Nalco in realizing its full potential as a standalone company.”
Apollo Management and Blackstone have worked together before. In October 2002, the firms teamed up with Oppenheimer Global Funds to invest $200m in a $1.2bn recapitalisation of Sirius Satellite Radio just two weeks before the satellite radio broadcaster faced a default on debt that could have pushed it into Chapter 11. Both firms committed $25m to the investment.
Last month, Blackstone and The Cypress Group teamed with mortgage insurer PMI and buyout firm CIVC Partners to buy out FGIC, General Electric’s financial guaranty business, for approximately $2.16bn.
Blackstone was founded in 1985 and has raised over $14bn for private equity investment, including Blackstone Capital Partners IV, the largest private equity fund ever raised at $6.45bn. Blackstone’s core businesses include real estate, corporate debt, marketable alternative asset management, mergers and acquisitions advisory, and restructuring and reorganization advisory.
Formed in 1990, Apollo Management, the private equity arm of Apollo Advisors, closed its fifth fund on $3.8bn in May 2002.
GS Capital Partners is the private equity arm of financial services institution Goldman Sachs. The firm’s latest fund was formed in July 2000 with total capital of $5.25bn ,with $1.5bn coming from Goldman Sachs and its employees.