Advent, Cinven and RAG-Stiftung buy Thyssenkrupp Elevator

Harriet Matthews
28 February 2020

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A consortium comprising Advent International, Cinven and RAG-Stiftung has acquired Thyssenkrupp Elevator for a purchase price of €17.2bn.

The transaction is expected to complete by the end of Q3 2020.

Thyssenkrupp said in a statement that it will re-invest €1.25bn for a minority stake in the business. The rest of the proceeds will be used to reduce the company's debt and will be re-invested in the business.

The consortium has made guarantees regarding the company's sites and employees, following concerns raised by union IG Metall during the sale process, as reported by the Financial Times.

The consortium plans to pursue a strategy combining organic growth with R&D investment and strategic-add on acquisitions, targeting high-growth markets, according to a statement.

The announcement comes a day after Reuters reported that Thyssenkrupp had received bids from two consortia for the business, with similar leverage of around 7x EBITDA, amounting to €7bn.

The consortium was one of two final bidding groups in the final round of the process, with the other consortium consisting of Carlyle, Blackstone and the Abu Dhabi Investment Authority.

Cinven deployed equity from its seventh vehicle, which held a final close in May 2019 on €10bn. The vehicle deploys equity tickets from €200m and will make 10-12 investments. The deal marks the second investment from the fund, following its investment in the £3bn buyout of life sciences supplier LGC in November 2019, along with the Abu Dhabi Investment Authority and Astorg.

Advent invested via Advent International GPE IX, which held a final close in June 2019 on $17.5bn, surpassing its target of $16bn. Thyssenkrupp Elevator will be the fourth investment from the vehicle, according to Unquote Data.

Thyssenkrupp began the structured process to sell its elevator business in August 2019. The company had previously planned to list the division, following the abandonment of Thyssenkrupp's joint venture with Tata, as reported by Mergermarket.

The asset generated interest from a number of strategic investors in the engineering sector, including Finland-based engineering company Kone, which expressed interest in acquiring the asset early on but left the process in February.

The asset also drew interest from PE bidders including KKR, EQT, 3G Capital and Hillhouse.

The deal will mark the third-largest ever PE-backed buyout in Europe, according to Unquote Data, surpassed only by Refinitiv in January 2018 and the take-private of Boots in June 2007.

The deal is also the largest buyout ever recorded in Germany by more than €8bn, surpassing the CHF 10.2bn (approximately €8.9bn) buyout of Nestlé Skin Health in May 2019 by a consortium led by EQT, the Abu Dhabi Investment Authority and the Public Sector Pension Investment Board.

Company
Thyssenkrupp Elevator is an engineering division of Thyssenkrupp that manufactures elevators. Its product portfolio includes passenger and freight elevators, escalators and moving walkways, passenger boarding bridges, stair and platform lifts. The company also offers maintenance services for its products.

The company operates in 1,000 locations and has customers in 100 countries. It is headquartered in Germany. The business generates revenues of €8bn and reportedly has EBITDA of €1bn.

People
Thyssenkrupp – Martina Merz (CEO).
Advent International – Ranjan Sen (managing partner and head of Germany).
Cinven – Bruno Schick (partner, head of DACH and emerging Europe).
RAG Stiftung – Bernd Tönjes (chairman of the executive board).

Advisers
Equity – Rothschild & Co (corporate finance); UBS (corporate finance); Bain & Company (corporate finance); Latham & Watkins (legal); Goetz Partners (M&A); EY (financial due diligence).