London-listed Electra Partners has received a binding offer from BC Partners to sell Allflex, its animal ID tags business, valuing the company at more than $1.3 billion.
The transaction, which is still pending regulatory clearance, will secure a 15x return and 28 percent internal rate of return for Electra. The firm will generate $398 million of proceeds upon completion of the deal.
Allflex was founded in 1955 in Palmerston North, New Zealand, under the name Delta Plastics. The business was then bought out by French group SFII in 1989. It subsequently passed by the hands of various private equity owners, including BNP Paribas and Goldman Sachs.
In 1998, Electra backed the $160 million buyout of the company with $46 million, on the back of stricter monitoring regulation following the “mad cow” crisis. The business was acquired from Goldman Sachs. Electra then expanded Allflex’s product range and geographical remit, and financed several add-on acquisitions.
Allflex makes plastic
The company generated $271 million in revenues and $102 million of EBITDA last year, a jump on the $248 million in revenues and $88 million of EBITDA it posted in 2011. Electra refinanced the business twice, in 2005 and 2007, allowing it to reap $140 million in combined dividends over its 14 year holding period.
BC’s binding offer seals the end of an auction process that had reportedly attracted bids from a dozen private equity firms, including Astorg Partners, AXA Private Equity, Bain Capital, The Blackstone Group, The Carlyle Group, Charterhouse Capital Partners, EQT, Kohlberg Kravis Roberts, OTPP, OMERS, and PAI Partners. Reports emerged last month that debt packages of up to $700 million, representing between 6.5x and 7x EBITDA, were being prepared to back the transaction.
The deal is the latest realisation by Electra, which has recorded seven exits in the 12 months to 30 September 2012. These have included the sale of its stake in luxury flooring manufacturer Amtico for £35.5 million, as well as its investment from CPA Global to Cinven.
The firm also scored a 3.3x return on the £1.2 billion (€1.41 billion, $1.83 billion) IPO of UK auto insurer Esure last March.