EQT enters exclusive negotiations to acquire Schülke

Harriet Matthews
07 April 2020

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EQT has entered exclusive negotiations to acquire Germany-based hygiene products producer Schülke, following a sale process that saw the asset becoming increasingly attractive due to the impact of the coronavirus.

The deal remains subject to competition authority clearance and a final agreement between the parties.

The process is one of very few to be affected positively by the Covid-19 outbreak. The vendor, Air Liquide, ended up pushing the final bid deadline back to 23 April, Mergermarket reported on 31 March. Ardian, EQT and PAI Partners ultimately advanced into the final round.

The company was originally marketed based on an EBITDA of €50-70m, according to Debtwire – this was raised to €75m as the coronavirus outbreak boosted the company's trading. The company is expected to see revenues increase during and following the outbreak due to increased consumer consciousness on hygiene, given that it sells hand sanitiser. It currently reports revenues of €335m.

EQT will deploy equity via EQT VIII, which held a final close in February 2018 on €10.75bn. Following the transaction, the fund will be 70-75% deployed, according to a statement.

The GP aims to strengthen the company's position in existing markets as well as to expand to new ones, according to a statement. It will also focus on R&D for new products, and support the company during the coronavirus outbreak by increasing its production of disinfectants.

Debt
Debtwire reported that the GP has taken a unitranche facility from HPS to finance the acquisition, citing an EQT spokesperson. Debt quantum through unitranche was pitched at around €400m, implying leverage of 5x-5.5x based on an EBITDA of €70-80m, according to Debtwire.

Company
Schülke was founded in 1989 and is based in Norderstedt. It has been a subsidiary of France-based Air Liquide since 1996. It employs 1,250 people.

People
EQT – Matthias Wittkowski (partner).
Schülke – Christian Last (CEO).

Advisers
Equity – Goldman Sachs (corporate finance); Deloitte (corporate finance); Freshfields Bruckhaus Deringer (legal).
Vendor – JP Morgan (M&A).