Operationally-focused buyout house Clayton Dubilier & Rice is to acquire Bodycote Testing Group (BTG), an international materials testing company, from parent company Bodycote in a carve-out deal worth £417 million (€519 million; $765 million).
CD&R beat a host of other private equity bids, including offers from CCMP Capital, CVC Capital Partners and Warburg Pincus, in an auction process that began in April this year.
Fred Kindle, who joined CD&R as a partner in June this year, will join BTG as chairman, while incumbent chief executive officer Jerry Higgins will step down.
Kindle, previously president and chief executive officer of NYSE-listed utilities technology company ABB, will assume a “hands on” role while CD&R search for a replacement for Higgins.
The £417 million deal comprised approximately 50 percent equity and 50 percent debt.
Huw Phillips, a CD&R partner who worked on the deal, was confident that the buyout firm is well positioned to thrive in current market conditions.
“In today’s environment where leverage levels are more conservative and equity cheques are larger, firms need to ensure that businesses undergo significant operational improvement to realise sufficient gains. This plays to our strengths,” he said.
London-listed Bodycote’s core business is industrial heat treatment. BTG, which represents approximately 25 percent of Bodycote’s overall business, has been built up via acquisitions over the last five years. It now operates 130 laboratories in more than 25 countries worldwide.
The investment, which will be made from Clayton Dubilier & Rice Fund VII, is expected to complete by the end of October. It is the firm’s first since it partnered with Bain Capital and The Carlyle Group to buy HD supply from The Home Depot for $8.4 billion in August last year.