PE-backed Fläkt Woods to sell subsidiary for €193m

Howden, a subsidiary of listed US group Colfax, has made a fully financed offer to acquire the Infrastructure & Industry division, which accounts for around 30% of Fläkt Woods' turnover. Fläkt Woods generated revenues of around €630m globally in 2012.

Should certain conditions be met and regulatory approval be secured, the deal could be finalised before the end of the year.

Sagard and Equistone had already had previous discussions with Howden a little more than two years ago but decided to hold onto the asset for longer. The GPs reorganised the company around three standalone divisions following the 2007 buyout, in order to improve the management focus on each activity and to make it more attractive to industrial buyers down the line. The remaining two divisions, which focus on air treatment and ventilation systems for buildings, are complementary and could either be sold separately or in conjunction.

Sagard and Equistone did not realise any value as part of the transaction, which will allow Fläkt Woods to reduce its debt burden and refocus on consumer-centric solutions. The GPs will be looking to grow the remaining two divisions of the business over the next couple of years, both organically and via strategic acquisitions. The private equity backers do not intend to fully exit Fläkt Woods in the meantime.

Previous funding
Sagard backed the secondary buyout of Fläkt Woods from UK-based Compass Partners in 2007, a deal valued in the €450-500m range. Sagard won the Goldman Sachs-run auction, which began in May 2007 and attracted the likes of 3i, LBO France and Doughty Hanson, as well as some industrial bidders. Equistone (then Barclays Private Equity) joined Sagard as a co-investor.

The GPs negotiated an amend-and-extend on the company's debt facilities last year, pushing maturities from 2015 to 2017.

Company
Created from the merger of Fläkt and Woods, the Geneva-headquartered group supplies the industrial and residential sectors with air treatment and ventilation solutions. The company recorded sales of €550m in 2006 and was aiming to reach a turnover of €1bn within three years at the time of the 2007 buyout. Fläkt Woods was affected by the 2009 crisis, particularly when it comes to the Infrastructure & Industry branch that was sold as part of the transaction – the business has however rebounded since then, according to the vendors.

People
Antoine Ernoult-Dairaine, Agnes Huyghues-Despointes and Maxime Baudry worked on the deal for Sagard, while Equistone was represented by Laurent Chauvois, Stanislas Gaillard and Julie Lorin.

Advisers
Vendor & company – Goldman Sachs (M&A); Messier Maris (Debt); Weil Gotshal & Manges (Legal); Chassany Watrelot (Legal); PwC (Financial due diligence).

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• Topics
• DACH
• Exits
• Industrials
• Partial sale
• Equistone Partners Europe
• Sagard Private Equity
• Switzerland