CVC exits Paroc in €900m trade sale

According to a statement, Owens Corning said it had reached an agreement to acquire Paroc for €900m from CVC in order to grow its presence in the European insulation market. The company intends to finance the deal through a combination of long-term debt and pre-payable bank financing.

CVC is exiting the business after a three-year holding. The deal is expected to complete in early 2018.

Earlier in October, Paroc was seeking an IPO exit route, as reported by unquote" sister company Mergermarket.

CVC had mandated Danske Bank and Bank of America Merrill Lynch as global coordinators, and Carnegie and SEB as joint bookrunners for the IPO.

Previous funding
CVC acquired the stone wool insulation company for €700m in October 2014 from the company's debtors. The GP paid approximately 9.1x EBITDA for Paroc, which achieved EBITDA of around €77m in 2013.

The deal was facilitated through a structured process that began in August 2014, with Nordic Capital, TPG, BC Partners and Cinven submitting bids of €700-750m.

Prior to the deal, the group was owned by its debtors, which acquired an 87.5% stake in the company in 2010 while employees retained the remaining 12.5%, according to unquote" data.

Paroc has a long history of private equity ownership, beginning in 1999 when IK Investment Partners carved it out from Partek Corporation for around FIM 150m (€25m).

IK divested the company in 2003 when it sold the business to BA Capital Partners and Accent Equity for €250m.

The two exited just three years later, handing off Paroc to Arcapita for an enterprise value of €620m. Nordic Mezzanine, ING Group and Morgan Stanley financed the deal, though Nordic Mezzanine sold its stake in the deal during a recapitalisation in 2007.

Arcapita lost its stake in Paroc in 2010 following a debt-for-equity swap, in which lenders wrote down the group's €750m debt pile to around €350m, in return for an 87.5% stake.

Company
Founded in 1943, the Helsinki-based company produces stone wool insulation materials for residential and commercial construction, and industrial applications. It has operations in 13 countries, including seven production plants in Finland, Lithuania, Poland, Russia, and Sweden. It employs a staff of 1,835.

In 2016, the firm posted net sales of €375.5m, and its 2017 sales are expected to reach €410m.

People
CVC Capital Partners – Peter Törnquist (chair).
Paroc – Kari Lehtinen (CEO).
Owens Corning – Mike Thaman (CEO, chair).

Advisers
Equity – Bank of America Merrill Lynch (M&A); Danske Bank (M&A); Freshfields Bruckhaus Deringer (legal); Avance Attorneys (legal).
Company – JP Morgan Securities (M&A); Lazard (M&A); Jones Day (legal).

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• Topics
• Exits
• Nordics
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• Freshfields Bruckhaus Deringer
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