Montagu Private Equity, the private equity house formerly known as HSBC Private Equity that spun out of HSBC Bank, has acquired family-owned UK packaging group Linpac.
Montagu has agreed to pay £860m for the business, below the originally reported £900m, after it entered into exclusive talks with the company’s owners earlier this month. Rival private equity bidders Apax Partners, Candover, BC Partners and CVC Capital Partners had earlier expressed interest in the business.
The transaction has been structured through a newly established financing vehicle, Picnal Ltd, set up by Montagu and Linpac's senior management. Michael Cornish, chairman, will remain on the board as a non-exeuctive director. Cornish is the son of the founder of Linpac, who set up the business in 1959. Around 30 members of the family hold a stake in the business.
David Williams, currently Linpac’s managing director, will become executive chairman. Mark Tentori, finance director, and Bob Lang also remain on the board. HSBC Bank has also agreed to take a minority stake in Picnal, the size of which has yet to be disclosed.
Montagu was advised by PricewaterhouseCoopers and HSBC Bank. Linpac management was advised by KPMG.
Linpac, based in Lincolnshire in England, is a packaging, materials handling and automotive components business which in the year to December 2002 reported revenues of £1.2bn. Among the company’s activities is the manufacture of fast food boxes, shipping crates, plastic automotive parts and other corrugated and paper packaging. Linpac employs 11,000 people across eight units, with operations on five continents.
In March, the company, which is being advised on the transaction by Deloitte & Touche, teamed up with two other corrugated packaging companies to form a new unit for expansion in Southern Europe.
The controlling family are expected to re-invest around £120m of the £700m windfall as part of a recapitalisation of the business in return for a minority stake. A mezzanine debt tranche is included in the financing, provided by Deutsche Bank.
In late May, Montagu completed its first transaction since gaining independence, acquiring UK food manufacturer Marlow from AstraZenca for £70m. In mid-June, the firm agreed to pay E420m to acquire Actaris, a Belgian metering systems manufacturer, from LBO France. The firm is investing from a E2bn buyout fund, which closed in October 2002. HSBC retains a 20 per cent interest in the business.