Montagu Private Equity has announced its second investment in Germany in as many weeks. The London-headquartered firm has agreed to acquire Kalle Holding, a Mittelstand company that makes articifical sausage casings out of viscose, plastic and textiles.
Kalle, which operates globally, has 1,250 staff and in 2003 achieved turnover of €167 million ($207 million). Financial details of the transaction were not disclosed. A source close to the deal said Kalle’s enterprise value was approximately €200 million.
Montagu is buying Kalle from CVC Capital Partners, the pan-European LBO house which acquired the business from Hoechst AG in 1997. Goldman Sachs advised both CVC and Kalle on the deal.
The transaction, which is yet to complete, comes just days after Montagu agreed to buy Stabilus, a German manufacturer formerly owned by Demag Holdings, a portfolio company of Kohlberg Kravis Roberts. Stabilus is thought to have changed hands for approximately €500m.
The two deals have ended a three-year wait for Montagu in the German buyout market. Prior to Kalle and Stabilus, the firm last invested in Germany in 2001, backing an add-on acquisition of portfolio company TDM Friction.
Nigel Hammond, head of European investment at Montagu, said in an interview the double was the reward for the firm’s sustained commitment to the German market. The two deals also validated Montagu’s strategy of targeting “strong niche operators with strong positioning and growth prospects” in their respective industry segments, he added.
The Kalle transaction will be funded from Montagu’s €1.8 billion buyout fund, which closed in 2002 ahead of the firm’s spinout from former parent HSBC Group.
Vince O’Brien, a director at Montagu, said that once closed, the two German deals would take the 2002 fund’s tally of completed transactions to ten. At that point, the fund will be 50 percent invested, half way through its investment period, he said.