US buyout firm Clayton, Dubilier & Rice has made it a guiding principle to invest in substantial businesses that can benefit from the operational insights and expertise members of the CD&R network can bring.
When it works you get the kind of returns that plain financial engineering can’t deliver, such as when CD&R bought Kraft Foodservice from Philip Morris for $690m in 1995 and sold it, as Alliant, six years later for $2.2bn to Royal Ahold. And this experience is now being brought to bear on the firm’s recent UK acquisition, food distributor Brake Brothers.
But experience and track record cannot guarantee a successful outcome, particularly when external events get in the way of implementing a business strategy according to plan. For CD&R the investment in Fairchild Dornier was a painful example of this. The firm invested $300m in 2000 only to see the German aircraft manufacturer slide into administration this year as the prospects for its new aircraft dissolved in the wake of 9/11.
PrivateEquityOnline sat down recently with Roberto Quarta and David Novak, two of the CD&R team based in London to talk about the Brake Brothers transaction – and about Fairchild Dornier – and to hear about their views on Europe and the objectives they have for the firm.
Since 1998, CD&R has committed some $1.4bn of equity capital in transactions in the UK, Italy and Germany. Globally, the firm manages funds of more than $3.5bn on behalf of public and private pension funds, college endowments, private foundations, banks and insurance companies. Since its founding in 1978, CD&R has led investments in 35 businesses, with aggregate annual sales of over $25bn. It has offices in New York and London.