Doughty Hanson triples money with Moeller sale to Eaton

The European mid-market firm found plenty of trade buyers to give the UBS-run auction competitive tension, despite a lack of financial sponsors ready to pay €1.55bn for the asset.

Doughty Hanson, a European private equity firm, has sold Moeller Group, a power distribution business, to Eaton Corporation, a diversified industrial group, for €1.55 billion ($2.22 billion). 

The sale was keenly contested by five trade buyers at an auction run by Swiss bank UBS. A source familiar with the deal said there had been no interest from financial sponsors and it marked a resurgence in confidence among strategic investors, who feel for the first time in years they can compete on a level playing field with buyout firms.

It is Doughty Hanson’s second realisation from Doughty Hanson & Co Fund IV, which will have returned €1 billion to investors and approximately two thirds of commitments.  Doughty Hanson closed in January 2005 with commitments of €1.5 billion. 

The fund had originally a much higher target, but some investors were concerned at the lack of exits from the previous fund. Investors that stayed with the firm are eyeing a portfolio of eight companies, which includes Tumi, the luggage manufacturer whose sales were up 30 percent in November, and TV3, Ireland’s largest commercial broadcaster.

Its investment in 20:20, a European mobile phone distribution business, however, is struggling under tough market conditions. The firm has recruited a new chief executive, Meinie Oldersma arrived from IT distributor Ingram Micro, to take charge of the phone company in an attempt to turn the business around and safeguard its £105 million equity commitment to the deal.

Moeller is based in Bonn, Germany, and employs approximately 8,800 people.  It has 15 production facilities globally and is represented in more than 90 countries worldwide.

Under Doughty Hanson’s ownership, Moeller has increased its revenues in its core business by 26 percent to €960 million from April 2005 to April 2007; opened seven new operations globally and created more than 170 additional jobs worldwide. In the calendar year 2007 Moeller expects to generate revenues of approximately €1 billion and to achieve an EBITDA of approximately €170 million.

Moeller has also accelerated its international expansion in Central and Eastern Europe, where it has established new assembly facilities in Russia and Serbia, and expanded its activities in India, China and Brazil.