KKR concludes Demag exit with Argillon sale

Five years after KKR bought a mini conglomerate from German industrial giant Siemens, it has sold the last piece of it, a manufacturer of catalysts and ceramics, to its UK rival.

Kohlberg Kravis Roberts has fully exited its investment in Demag with the sale of Argillon Group, a German maker of catalysts and advanced ceramic materials, to Johnson Matthey, a UK rival, for €214 million ($313.9 million).

Demag was the holding company, 81 percent owned by KKR, for Argillon and six other companies acquired in September 2002 from the German industrial group Siemens, which at the time retained a 19 percent stake in the mini-conglomerate.

KKR, which is preparing for its IPO, declined to comment on the sale. In a copy of the private placement memorandum for KKR’s European Fund II, the firm stated Demag was generating a gross IRR of 35.9 percent and gross multiple of 1.9 times its original cost of $302.9 million based on the unrealised value of $563.4 million as of 30 September 2004.

In 2003, all seven businesses of Demag Holding had a combined turnover of €3.2 billion and 20,800 employees.

In August 2004 Montagu, a European buyout firm, bought Stabilus, a producer of gas springs used in automotive and a wide range of industrial applications.

Demag Cranes & Components, the world’s largest designer and manufacturer of cranes and crane accessories for industrial applications, floated last December in Frankfurt.  Gottwald Port Technology, a supplier of harbor logistics solutions and a market leader in mobile harbor cranes, merged with Demag Cranes.

Omnetica, a provider of network integration services in the UK, France and Italy, was sold to Kingston Communications, a UK telecoms group, for £169 million in December 2004 in an all-share deal. KKR did not sell down its stake in Kingston until the following June.

Landis & Gyr, a manufacturer of electricity and heat meters, was sold to Australian environmental investor Bayard Group in July 2004.

Metzler Corporate Finance, a German investment bank, acted as the exclusive M&A advisor to Demag in the Argillon deal. Orth Kluth was appointed as legal advisor to Demag.