Deal in Focus: Sagard et al. back Safic-Alcan MBO

Although financial details were kept confidential by the parties, the deal is understood to have valued Safic-Alcan at around €250m, compared with the c€100m valuation reached backed in 2007 when Parquest (then ING Parcom) acquired the business from Alpha Associés Conseil.

The sale process, managed by Leonardo & Co, was launched in the summer of 2014. But Sagard was already familiar with the business, having followed it for several months and initiated contact with the management team. Euromezzanine was meanwhile already involved with the company, having provided €20m of the €22m mezzanine strip partly financing the 2007 buyout, according to unquote" data.

The process is nevertheless understood to have been competitive, with several other private equity funds in the running, including PAI Partners. The new sponsors were able to gain an advantage with the unusual investment thesis for a mid-cap deal, according to Sagard partner Antoine Ernoult-Dairaine. Rather than aim for control of the company, the backers were happy letting management and staff take a majority stake, supporting the business as minority shareholders.

Sagard drew equity from the Sagard III evergreen fund for this transaction, while Euromezzanine invested purely in equity this time around. A large majority – around 300 out of 400 – of the company's staff also remain shareholders in Safic-Alcan.

HSBC and Natixis provided a debt package to finance the transaction, with Natixis acting as coordinator. They were joined by Societe Generale, taking on senior mandated lead arranger duties, prior to the syndication. Leverage is understood to be moderate, amounting to around half of the deal value.

Consolidation ahead
Sagard stated it was attracted to Safic-Alcan because of the quality and drive of the management team, as well as the high barriers to entry in the speciality chemicals distribution market, which include the importance of critical mass and the traditional reluctance of chemicals manufacturers to change distributors.

Another attractive factor was the growth trajectory of the business, which saw its turnover go from €250m at the time of Parquest's investment in 2007 to €400m in the latest financial year. This was driven in part by acquisitions, which the new backers are keen to pursue given the level of fragmentation at play in the speciality chemicals distribution market.

Founded in 1847, Safic-Alcan has a particular focus on the rubber, coatings, pharmaceuticals and cosmetics markets. The company is mainly active in France, Spain, the UK, Germany and Benelux, but also has a direct presence in several other European countries, as well as Turkey and China. It is also currently looking to expand further in eastern Europe.

People
Sagard – Antoine Ernoult-Dairaine, Maxime Baudry, Camille Claverie
Euromezzanine – Thierry Raiff, Ajit Jayaratnam, Ludovic Bart
SGCP – François Rivolier, Marc Jacquin, Marc Diamant, Benjamin Richy

Advisers
Equity – KWM, Maxence Bloch, Pierre-Louis Sévegrand-Lions, Simon Servan-Schreiber, Olivier Vermeulen, Adeline Thieu-Roboam, Raphaël Béra, Gwenaël Kropfinger (Legal, tax); Wragge Lawrence Graham & Co, Pierre-Emmanuel Chevalier, Alexia Ruleta (Legal); ATK, Jerôme Souied, Hugo Azerad (Commercial due diligence); PwC, Guillaume Lorain, Eric Douheret (Financial due diligence).
Vendors – Leonardo & Co, Patrick Maurel, Ludovic Tron, Valérie Pellereau (M&A); DLA Piper, Sarmad Haidar, Julia Elkael, Martin Chassany (Legal); 8Advisory, Pascal Raidron, Christian Berling, Vincent Lepreux (Financial due diligence); Arsène Taxand, Frédéric Teper, Laurent Mamou (Tax).
Management – DC Advisory, David Benin, Frédéric Meyer (M&A); Scotto & Associés, Nicolas Ménard-Durand, Tessa Parodi de Schonen (Legal).
Debt – White & Case, Raphael Richard, Samir Berlat (Legal).

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