New York-based buyout shop Clayton, Dubilier & Rice (CD&R) has agreed to exchange its 29 percent equity stake in publicly traded global technology services and consulting company Covansys for at least $180 million (€151 million) in cash.
The transaction also includes a $15 million subordinated note due at the end of 2005; five million five-year warrants with a strike price of $18 per share, potentially yielding up to $90 million; and two million shares of Covansys common stock, or approximately 5 percent of the company’s outstanding equity.
CD&R originally invested $100 million into the company back in March 2000, before Covansys had it name changed from Complete Business Solutions in 2001. CD&R followed the initial investment up with additional $100 million a month later.
The CD&R recap is part of a long-term master services agreement and a stock purchase agreement with the Fidelity Information Services, a subsidiary of Fidelity National Financial. Covansys will become Fidelity’s primary provider of outsourced IT services
Earlier this month, CD&R completed the acquisition of VWR International, a US-based global distribution platform of laboratory supplies, from German pharmaceuticals group Merck for $1.65 billion (€1.36 billion). The VWR purchase came right on the heels of CD&R’s sale last month of its 84 percent stake in Jafra Cosmetics International to Germany-based household appliance and consumer products company Vorwerk. Terms of the deal were not disclosed, though a source familiar with the deal said that the sale will yield CD&R approximately five times return on capital invested into the company.