BC Partners reacquires CeramTec alongside CPPIB

CPPIB is making a capital contribution of around EUR 800m as part of the deal, according to a statement.

The deal values CeramTec at around EUR 3.8bn, according to press reports.

BC and CPPIB will each hold a stake of 50% in the company. The deal sees the parties acquire the stake previously held by BC and its co-investors, Ontario Teachers' Pension Plan (OTPP) and Public Sector Pension Investment Board (PSP). Further co-investors included Credit Suisse and Adam Street Partners, according to Unquote Data.

BC first backed CeramTec in 2018, investing alongside OTPP and PSP. The company was valued at EUR 2.6bn at the time. CeramTec recorded EBITDA of EUR 183.4m in 2018, marking a 25% increase from 2016, according to its annual report.

According to Unquote sister publication Debtwire, a consortium of banks including Bank of America Merrill Lynch, Morgan Stanley, Deutsche Bank, Nomura and UBS arranged a €1.5bn debt package to support the 2018 deal.

BC originally deployed equity to invest in CeramTec via BC Partners Fund X. The vehicle held a final close in January 2018 on EUR 7bn and was 86% deployed as of March 2020. The latest deal will be the first realisation from the fund, according to Unquote Data.

The GP is now investing in CeramTec via BC Partners Fund XI. The fund held a first close in September 2020 on EUR 4bn against a EUR 8.5bn target. The vehicle made its first platform investment in July 2021, acquiring UK-based IT service provider Valtech in a USD 1.5bn buyout.

The deal is intended to allow BC to realise additional value in the company, as well as continuing to take advantage of further potential growth in the medical technology space. CPPIB prevailed as the highest bidder in the sale process, facilitating a partnership with BC Fund XI.

Mergermarket reported in January 2020 that BC was preparing an exit for CeramTec, with the company expected to be valued at more than EUR 3bn. A dual-track process was considered given the size of the business, as well as a potential SPAC merger, Mergermarket reported in March 2021. A potential split of the company into separate medical and industrial units was previously discussed, sources told Mergermarket, noting that this would be a complex option.

Cinven initially attempted to float the business in 2015, Mergermarket reported at the time. The GP had acquired CeramTec from US-based chemicals company Rockwood in 2013 in a deal that valued the company at EUR 1.49bn.

Under BC's ownership, CeramTec developed its product pipeline, made operational improvements, and strengthened its medtech operations, according to a statement. The company acquired Switzerland-based ceramic dental implants producer Dentalpoint in January 2021.

The deal follows BC's establishment of a continuation vehicle for its investment in Springer Nature in June 2021, as reported. The GP had considered a listing for the company on three separate occasions, according to Mergermarket, but opted instead to extend its holding period to take advantage of future growth opportunities.

BC Partners is a minority shareholder in Acuris, the parent company of Unquote.

Company
Founded in 1903, Plochingen-headquartered CeramTec produces ceramic components for medical and industrial applications, including dental implants. The company employs 3,500 staff and has 20 production sites.

For the nine months to September 2020, CeramTec posted adjusted EBITDA of EUR 163.5m, a year-on-year decrease of 13%. The company also experienced an 11% drop in revenues in the same period, posting turnover of EUR 418.3m, according to its Q3 2020 report.

According to its latest annual report, the company posted revenues of EUR 552.7m in 2020, versus EUR 620.4m in 2019 and EUR 600.2m in 2018. The company posted EBITDA of EUR 190.5m in 2020, versus EUR 222.7m in 2019 and EUR 183.4m in 2018.

People
BC Partners – Raymond Svider (chairman).
CeramTec – Hadi Saleh (CEO).
CPP Investments – Hafiz Lalani (managing director, head of Europe, direct private equity).

Advisers
Vendor – Bank of America (corporate finance); Morgan Stanley (corporate finance).
Equity (Canada Pension Plan Investment Board) – Nomura (corporate finance).

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