Paragon buys Castolin Eutectic

Harriet Matthews
23 April 2020

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Paragon Partners has wholly acquired Germany-based industrial equipment protection and repair company Castalon Eutectic from Messer Group, which owned the company via its MEC Group.

The company plans to invest in new strategic initiatives and to pursue M&A opportunities.

The GP is currently deploying equity from Paragon Fund III, which held a final close in June 2019 on €780m, surpassing its target of €500m. The vehicle writes equity cheques of €30-150m and invests in companies with enterprise values of €30-250m and EBITDA of €10-30m.

Debt
Unquote sister publication Debtwire reported that the acquisition has been financed with a small vendor loan alongside a significant equity contribution from the GP, citing two sources familiar with the situation.

Debtwire also reported that the company was acquired for an EV in the range of 6-7x the company's EBITDA of €23m. Sponsors Paragon, One Equity Partners and Argos Wityu had placed bids for the company by 16 March 2020, according to the report.

Company
Founded in 1906, Castolin Eutectic produces welding, brazing and coating consumables and equipment used in the protection and repair of industrial equipment. It has more than 40,000 customers in industries such as agriculture, steel and mining, according to a statement.

The applications of its products include coating power plant boilers and hardfacing drilling heads used in the oil and gas sectors.

Based in Kriftel, the company has six production plants in total and employs 1,600 staff. It generates revenues of €300m.

People
Paragon Partners – Edin Hadzic (co-founder, managing partner).
Castolin Eutectic – John Kirkwood (CEO).
Messer Group – Stephan Messer (owner).