TPG-backed Grohe goes to Lixil in trade sale

TPG and Credit Suisse sold a joint 87.5% stake in the German firm to Lixil and DBJ, after a holding period of almost 10 years. Grohe's enterprise value is estimated at €3.06bn.

The German company and its subsidiary Joyou will continue to operate independently but will be managed through newco Grohe Group, based in Luxembourg. The newco is a 50:50 joint venture between Lixil and DBJ.

The transaction is expected to close in Q1 2014.

The remaining 12.5% stake in Grohe is held by the Cai family, which founded Chinese bathroom fittings manufacturer Joyou. In the past, Grohe acquired a 72% stake in the Joyou from its family owners.

Grohe now aims to expand its brand in the Asia-Pacific region, with a special focus on Joyou.

The exit comes after months of uncertainty, with the latest rumours stating Grohe would list on the stock market. The IPO, which was said to be the preferred exit strategy because strategic buyers bid less than the expected €4bn, was tipped to happen as early as Thursday 26 September.

In July this year, the sale of Grohe reportedly entered crucial phases with six bidders placing offers. The main bidders included large trade players, such as Switzerland-based Geberit, Japan-based Lixil and US-based Fortune Brands.

At the beginning of the week, Geberit was said to have dropped out of the race. Its head of corporate communications, Roman Sidler, said the firm had not submitted a binding offer for Grohe.

In 2011, the GPs reportedly started to consider different exit strategies to divest the firm, with an IPO or a trade sale considered to be most likely. TPG and Credit Suisse subsequently ran Grohe's potential sale in a dual-track process.

In 2007, Grohe planned to raise €900m in bonds by issuing senior notes, aiming to free itself from bank covenants that come with financial maintenance clauses restricting leverage by converting debt into bonds.

The two private equity houses bought Grohe from BC Partners in 2004 for around €1.5bn, with a €800m debt facility provided by Citigroup, Credit Suisse and Deutsche Bank.

Company
The Grohe Group reported a turnover of €1.4bn and an EBITDA of €273m in 2012. The firm employs around 9,000 staff.

Grohe is based in Düsseldorf. The firm operates three plants in Germany, namely in Hemer, Lahr and Porta Westfalica. Furthermore, it runs plants in Albergaria-a-Velha (Portugal), Rayong Province (Thailand) and Mississauga (Canada).

People
Colin Taylor is managing director and partner at Credit Suisse's DLJ Merchant Banking Partners. Yoshiaki Fujimori is Lixil's president. Stephen Peel is managing partner at TPG.

Grohe CEO David Haines, who was brought in by the GPs in 2004, remains in his position. He has signed a new five-year contract.

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• Topics
• DACH
• Consumer
• Exits
• Germany
• TPG Capital
• Credit Suisse
• Trade sale