Silverfleet exits Prefere Resins in SBO to One Rock

The deal is subject to antitrust and FDI approvals and is expected to close in Q2 or Q3 2022, according to a statement.

Unquote sister publication Mergermarket reported in January 2022 that Silverfleet was preparing Prefere Resins for a sale.

In March, Mergermarket reported that final bids were due on 4 April, amidst concerns about the company's exposure to Russia in the wake of Russia's invasion of Ukraine. Later in March, Mergermarket reported that final bidders were seeking more time to assess the company's exposure to rising raw materials costs and to Russia, with the valuation expected to decrease given these concerns.

The company was initially marketed based on EBITDA of EUR 46m, with an enterprise value of EUR 300m - EUR 350m expected based on a multiple of 9x.

One source subsequently told Mergermarket that the company would be more likely to be sold based on EBITDA of EUR 40m, with a 6.5x EBITDA multiple equating to an enterprise value of EUR 280m.

Final bidders in the sale process included chemicals maker Arclin (backed by the Jordan Company) and Paragon Partners. Rhone Group portfolio company ASK Chemicals was previously involved in the process, Mergermarket reported.

Silverfleet acquired Prefere Resins from Capiton and Intermediate Capital Group (ICG) in 2018, deploying equity via Silverfleet Capital Partners II, which held a final close in June 2015 on EUR 870m. The fund targets businesses with enterprise values of EUR 70m - EUR 250m, according to Unquote Data.

During the investment period, Prefere Resins expanded its geographical reach via the acquisition of the Melamines & Paraform business of Ineos Enterprises, Silverfleet said in a statement period. The GP also supported its development of environmentally attractive products and its ESG credentials.

New York-headquartered One Rock Capital Partners generally invests in North America-based mid-market companies. It is backed by strategic partner Mitsubishi and focuses on five sectors: chemicals and process industries, speciality manufacturing and healthcare products; food and beverage manufacturing and distribution; business and environmental services; and automotive retail.

Silverfleet announced in July 2021 that it no longer planned to raise a third fund, as reported. The GP is now focusing on the development of its current portfolio and future exits. Silverfleet II has now made seven exits and has five remaining portfolio companies, according to Unquote Data. The GP's recent exits include the sale of Care Fertility to Nordic Capital, which saw the firm generate returns of 2.6x money, as reported.

Company
Founded in 1909 and headquartered in Erkner, Prefere Resins produces phenolic, specialty urea and, melamine resins as well as high quality derivatives of methanol-(C1)-chemistry. Its products are used in industries including construction, textiles, automotive, paints, plastics, and rubber and tyres.

The company generated EBITDA of EUR 25m and revenues of EUR 220m at the time of its acquisition by Silverfleet, employing 320 staff. It now has around 600 employees and posts revenues of more than EUR 450m, according to its website.

People
Silverfleet Capital – Adrian Yurkwich, Benjamin Hubner (partners).
Prefere Resins – Elmar Boeke (chief executive).

Advisers
Vendor – Houlihan Lokey (M&A); Advancy (commercial due diligence); EY (financial due diligence, tax); Sidley Austin (legal); BMH Braeutigam & Partner (legal); ERM (environmental due diligence); Shearman & Sterling (legal).

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