BPE backs Dätwyler Sealing Technologies MBO

The transaction is expected to close on 4 May 2020, according to a statement.

The MBO is the second PE-backed carve-out from Dätwyler in the past six months. Aurelius bought UK- and Germany-based electronic and technical components businesses Distrelec and Nedis from Dätwyler in December 2019. The businesses had combined revenues of €275m.

Sparkasse Rhein-Nahe provided debt to support the latest buyout.

Nikolaus Winther, partner at BPE, told Unquote how the deal came about: "We started looking at DST one and a half years ago – we were introduced to the opportunity and the company by one of our investors who is one of the former MBO/MBI managers we worked with more than 15 years ago. The company we acquired at the time was acquired by the same seller who later sold DST to Dätwyler (Phoenix Group). Our contact had hired the current managing directors of the company at the time for Phoenix.

"The seller was not really satisfied with the outcome of the first auction process – price is always an issue. We initiated the process again and made the next move to re-engage, which is how we managed to get exclusivity with the company. After a year of discussions and negotiations, we agreed on new terms."

DST is BPE's first investment from its latest fund, which held a final close for BPE 4 on €135m in March 2020. The vehicle deploys equity tickets of €5-15m and deployed €10m in this case.

Asked about the value creation strategy for DST, Winther told Unquote: "There are three main sources of value creation for DST – the first one is that the company is a spin-out, and having the company as a standalone entity already enables the management team and the company to profit from a different situation in areas such as procurement and sales, acting on a standalone basis and developing a strategy with us. They don't have to adhere to regulations or orders from headquarters, they are independent from any conglomerate structures or decisions. That already has a big impact and having their own strategy is a big step."

Winther said the company will also undergo a continuing restructuring. "There are quite a few restructuring topics to deal with from the past three to four years and the management team has already initiated restructuring measures. The management will implement new structures and initiatives in terms of sales organisation, marketing and production."

The company will also seek bolt-ons in other European markets, Winther said. "There are some add-on opportunities that we are looking into. At the moment, given the crisis, it's hard to say when and where this will happen and what the valuations will be, especially since some of the main competitors are in Spain and Italy. So far, the business is not impacted by the crisis."

Winther explained that DST's long-term infrastructure-based projects also mean it has not been significantly affected by the coronavirus outbreak. "Some of DST's main competitors are in Italy and Spain, and those businesses are currently facing severe difficulties. One of the sectors they serve is tunnelling, and these are projects that are planned for the next 5-10 years, so a short-term impact for the next three to six months does not really affect things such as a tunnel project in the Alps planned for 2025, for example.

"DST also works on railway infrastructure projects that are backed by public bodies and communities. The company implements track insulation and some safety measures in railway, underground and tram projects in cities, and these projects are currently also doing well – cities are quite empty, so their projects are going ahead."

Company
DST provides insulation and sealing for applications in tunnels, underground construction and railway track superstructures. The company is headquartered in Waltershausen, Germany, and was founded in 1970. It has 180 employees and generates revenues of CHF 40m with an EBITDA margin of 10%. It was acquired by Dätwyler in 2012 from Phoenix.

People
BPE – Nikolaus Winther (partner).

Advisers
Equity – EY (financial due diligence); EY Parthenon (commercial due diligence); Alpers Wessel Dornbach (tax); Schnittker Möllmann Partners (legal); Lincoln International (debt advisory).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Buyouts
• DACH
• Industrials
• Germany
• BPE Unternehmensbeteiligungen (BPE Private Equity)