Bain, Cinven to acquire Lonza Specialty Ingredients

The transaction is expected to close in H2 2021.

The deal values LSI at CHF 4.2bn (€3.9bn), according to a statement. This corresponds to a valuation of more than 13x its 2019 EBITDA of CHF 302m (€279m).

Bain and Cinven said in a statement that their growth strategy for the company will include the enhancement of LSI's research and development capabilities, as well as a consolidation of the microbial control solutions market via a buy-and-build strategy.

Cinven is investing in LSI via its Seventh Cinven Fund, which held a final close in May 2019 on €10bn. The fund deploys minimum equity tickets of €200m.

Bain Capital is deploying equity from Bain Capital Europe V and Bain Capital XII to back the deal. Bain Europe V held a final close in July 2018 on €4.3bn, while Bain XII closed on $9.4bn in September 2017. Bain XII generally deploys tickets of $200-500m, but can make both smaller and larger investments.

The two GPs previously teamed up to acquire Stada Arzeinmittel in August 2017, taking the company private in a deal valued at €5.6bn, equating to 14.9x EBITDA.

Lonza announced that it intended to carve out its speciality ingredients business in June 2019. Unquote sister publication Mergermarket first reported in February 2020 that Lonza's speciality ingredients unit could go up for sale, with the company expected to pursue a dual-track sale and listing process. Mergermarket reported that the deal was expected to be valued at more than CHF 3bn, based on around 10-12x its 2019 EBITDA.

The process was expected to begin in Q4, Mergermarket reported in June 2020. Early interested sponsors included Advent, Ardian, IK and Bain, it noted in July 2020. The bid deadline was extended in November 2020 due to new coronavirus restrictions, Mermermarket later reported. The process saw Bain, Cinven and chemicals company Lanxess submit non-binding offers in December 2020.

Company
LSI was formerly part of Lonza, which was founded in 1897. The company produces chemicals for microbial control solutions, which are used in products including disinfectants, sanitisers, preservatives and industrial coatings. The chemicals are used to eliminate or control harmful or unwanted micro-organisms.

The company is headquartered in Basel and employs 2,800 staff. It reported EBITDA of CHF 302m and revenues of CHF 1.7bn in 2019, according to its latest annual report.

People
Bain Capital – David Danon (managing director).
Cinven – Pontus Pettersson (partner).
Lonza – Pierre-Alain Ruffieux (CEO).

Advisers
Equity – Kirkland & Ellis (legal); Freshfields Bruckhaus Deringer (legal); Lenz & Staehelin (legal); EY (financial due diligence, tax); Boston Consulting Group (commercial due diligence); Alvarez & Marsal (operational due diligence); ERM (environmental due diligence); Nexant (technology due diligence); The Valence Group of Piper Sandler (M&A); Opus Corporate Finance (M&A); Trumont (M&A).
Vendor – Bank of America (M&A); UBS (M&A).

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• Topics
• Buyouts
• DACH
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• Cinven