Wendel gets exclusivity on Materis

11 January 2005

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Following EurazeoÂ’s decision not to pursue the acquisition of Materis from LBO France, Wendel Investissement has gained exclusivity. The industrial chemicals company has been valued at around EUR 2bn. Eurazeo refuses to disclose the reasons for which it broke off its talks with Materis in December 2005. Wendel, which is being advised by SociÃ©tÃ© Generale and Goldman Sachs, had been poised to step in after its rivalÂ’s exit. LBO France used Rothschild to run the auction, which also attracted interest from BC Partners, PAI partners and KKR . Wendel is expected to invest EUR 400m of equity in the deal. The assumed EUR 1.6bn debt component of the transaction is allegedly some EUR 200m less than Eurazeo had put in place ahead of a deal. ING will allegedly be providing staple funding for the transaction, as it did when LBO France purchased the company two years ago. Wendel is apparently keen to add on further chemicals companies, with the aim of holding the group for an investment period of 5-10 years; to account for the cyclical nature of the sector. The deal looks set to complete in March 2006.Present in more than 35 countries, Materis, produces speciality chemicals for the construction sector, as well as in decorative paints, mortar, calcium aluminates and adjuncts for concrete and cement. It purportedly has an EBITDA of about EUR 250m for 2005 and annual sales in the region of EUR 1.5bn.LBO France backed the secondary buyout of Materis from Carlyle, CVC Capital Partners and Advent International in October 2003. LBO France beat Bain Capital, Clayton Dubilier & Rice and Vestar Capital Partners in the final stages of negotiations to acquire an 86% interest in a deal valued at 5.5x the companyÂ’s EBITDA. The deal represented the largest French buyout in 2003 and the largest buyout completed by LBO France to date. A EUR 810m debt package to support the transaction was arranged by ING, comprising EUR 600m of senior debt and EUR 210m in mezzanine financing