European buyout firm Candover has continued the steady flow of exits from its Candover 1997 Fund, selling its entire stake in Irish packaging group Clondalkin to Warburg Pincus in a deal valuing the business at €630 million ($783 million).
The deal marks Candover’s seventh full exit from the fund, which closed on £850 million (€1.245 billion; $1.55 billion) in December 1997.
Candover organised a competitive auction process coordinated by Deutsche Bank. The sale process lasted almost a year, after an unnamed US buyout fund had initially expressed an interest in acquiring the business, only for talks on a deal to stall.
The firm supplies packaging solutions to a diversified customer base, principally in the food and beverage, consumer products and pharmaceuticals sectors. It operates from over 40 separate manufacturing locations throughout Europe and the US. Clondalkin was taken private from the Irish Stock Exchange by Candover and its management team in November 1999, for a total consideration of €550 million.
Candover has not disclosed the exact return, but confirmed that the transaction generated a return in excess of two times. “It’s a terrific return on our investment,” said Ian Gray, director at Candover. “Delisted firms have not always achieved good returns for investors. We paid a 40 percent premium to delist the business, and to more than double our money shows that we had identified an undervalued asset.”
Senior management will continue to hold a substantial stake in the business, with group chief executive officer, Norbert McDermott, and all the senior management team remaining in their roles.
Dalip Pathak, who heads Warburg Pincus’ European operations, said the deal provided Warburg Pincus with a platform to leverage the Clondalkin's global position, with further expansion into the US and Asia. The Clondalkin deal marks Warburg Pincus' largest deal in Europe to date. Pathak said the firm was “actively looking” at a number of other opportunities in Europe as it seeks to significantly increase its European operations.
Deutsche Bank, Barclays Capital and Lehman Brothers have provided a fully underwritten debt financing package for the transaction.
In the last twelve months Candover has made full or part-realisations from four companies in the 1997 Fund portfolio, including Airtechnology and Pandrol (parts of its investment in Charter), Bourne Leisure, Picard and Inveresk.