IK-backed Klingel advances to round two with Altor among sponsors circling

Patrick Costello and Johannes Koch
16 June 2023

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The sale of Klingel medical metal, a German medtech and medical equipment company backed by IK Partners, has Sweden’s Altor among the sponsors admitted to round two, two sources familiar with the situation said.

A total of four parties remain in the process following first-round bids, one of the sources said. Denmark-based sponsor Novo Holdings may also have progressed to the second round, the second source said.

New York-based AEA Investors may also be in the mix with a portfolio company looking for German expansion, a third source familiar said. AEA backs, among other assets, Burke Porter Group, which offers a range of brands and specialities in the medical device and precision machined components segments, according to its website.

A number of potential buyers were admitted to the second round, but decided not to pursue the asset given high valuation expectations, one of the sources and a fourth and fifth source familiar said.

PAI, Onex, Astorg, Ardian and Castik were among a broad pool of sponsors and trade players that initially showed an interest in Klingel but are now out of the auction, two of the sources said.

Resonetics, a trade buyer and medical device manufacturer backed by Carlyle Group, was also seen around the asset in the earlier stages, but has since dropped pursuit, one source noted.

First-round bids were slated to be collected late last month (May) in the Jefferies-led auction, in which Klingel was being marked off around FY23 adjusted EBITDA of EUR 34m on the back of EUR 151m sales, as reported by this news service.

The vendors are striving to fetch an enterprise value (EV) of around EUR 500m for the asset, implying an EBITDA/EV multiple in the mid-to upper teens, as reported.

The medical equipment specialist was expected to be marketed off around EUR 30m-EUR 35m EBITDA, as reported in February.

In FY22, Klingel reported EUR 30m adjusted EBITDA and EUR 135m sales with sales projected to reach EUR 249m in four years, as per this news service.

Klingel has added around EUR 85m in sales via acquisitions since 2018 and has six bolt-ons in the pipeline as part of its buy-and-build strategy in both Europe and the US, as reported.

Klingel has a score of 78 according to Mergermarket's Likely to Exit (LTE) predictive algorithm*.

Klingel is among a handful of keenly anticipated medtech deals to launch in the German-speaking DACH region this year, with Ardian-backed dental tech firm imes-icore expected to come to market later this year.

Another hotly watched process for family-owned HEINE Optotechnik, a German medical diagnostic instruments maker, was called off last month after initial offers did not meet the Heine family's price expectations, as reported.

IK acquired Klingel from German financial sponsor Halder Beteiligungsberatung for USD 135.8m in 2018, according to Mergermarket data. The company posted around EUR 36.5m revenue in 2017, the data shows.

Among the bolt-ons completed under IK's stewardship are the acquisitions of Bachler Feintech and Gehring Cut, two Swiss manufacturers of high-precision surgical instruments, in 2019; of puracon, a German specialist in sterile medical packaging in 2020; and of Ruetschi Technology, a Swiss maker of medical instruments and implants.

Founded in 1986 and headquartered in Pforzheim in Baden-Württemberg, Klingel is a provider of high-quality and complex high-end components, instruments and implants for prevention, diagnosis, surgical procedures, therapy and rehabilitation, according to its website. The company has around 850 employees and operates eight production sites and 450 CNC machines.

IK, Jefferies, Novo, Ardian and PAI declined to comment. Altor, AEA, Astorg, Castik, Carlyle and Onex did not respond to requests for comment.

by Patrick Costello, Johannes Koch and Claude Risner with additional reporting from Rachel Lewis and Min Ho

*Based on a number of key industry, holding behaviour, and dealflow criteria, Mergermarket's next-generation platform assigns a Likely to Exit (LTE) score to each exit opportunity, with a higher score corresponding to a higher likelihood for an imminent transaction.