Axcel buys SFK Leblanc from Maj Invest in consolidation play

ATP Private Equity Partners – the private equity arm of the Danish pension fund – will co-invest alongside Axcel in the new entity, which will likely retain the SFK Leblanc name. Axcel's managing partner Christian Schmidt-Jacobsen told unquote" the deal was a very large one for Axcel, which was part of the motivation for inviting a co-investor along, and that the GP expects to add one or two additional co-investors to the deal before closing. Axcel will be the majority shareholder in the new group.

Schmidt-Jacobsen said his firm had been presented with an opportunity to acquire all four businesses simultaneously and opted to weather the complexities of a four-way merger/buyout instead of doing a traditional platform investment. He said that while the transaction was complicated by its scale, it also presented an exciting opportunity to create a market-leading company holding around 15% market share, and begin the group's integration immediately.

The three smaller companies in the buyout – Attec, Itec and Carometec – had been privately owned before the buyout and were approached directly by Axcel ahead of the transaction, Schmidt-Jacobsen said. William Blair International facilitated the sale of Maj Invest's SFK Leblanc. Prior to the merger, the three companies had a history of collaborating to varying degrees, which supported the case for the deal, according to Schmidt-Jacobsen.

Nordea and Nykredit supplied senior financing for the deal, while Capital Four and pension fund Danica provided junior debt, the Axcel managing partner said. The GP had wanted to top up its senior financing with a junior package, which led to talks with Capital Four and Danica, he said, adding that it had not sought debt from other alternative lenders.

Nordea provided DKK 919m of leverage for the acquisitions, consisting of Term Loans A and B, a capex facility and an RCF. The Term Loans A and B have tenors of six years and seven years, respectively, while the capex and RCF both run for six years.

Local media estimated the enterprise value of the deal to be around DKK 1.4bn. The deal is expected to close in August 2016, before Axcel intends to begin fundraising for its fifth buyout vehicle.

Previous funding
Maj Invest – then LD Equity – acquired SFK Systems from Danish Crown through an MBO in February 2006, tapping its LD Equity 2 fund for an 80% stake.

During the GP's ownership, it supported the bolt-ons of GE Leblanc in the US and Nawi in the Netherlands.

Company
SFK Leblanc, Itec, Carometec and Attec are manufacturers of high-tech slaughtering equipment for meat production operations.

The new company will employ 740 people and generate around DKK 1.2bn of revenue with a 15% EBITDA margin measured on projected revenue, according to Schmidt-Jacobsen. Following the merger, Axcel claims SFK Leblanc will hold around 20% of the global slaughterhouse technology market.

People
Axcel – Christoffer Müller (director).
Maj Invest Equity – Per Høholt (partner).
SFK Leblanc – Ib Sand Nykjær (CEO).

Advisers
Vendor – William Blair International (corporate finance); EY (financial due diligence, tax); Bech-Bruun (legal).

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• Topics
• Buyouts
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• Nordics
• Industrials
• Denmark
• EY (Ernst & Young)