Cinven, Astorg to acquire LGC for £3bn

Katharine Hidalgo
21 November 2019

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A consortium of Cinven, Astorg and the Abu Dhabi Investment Authority have agreed to acquire life sciences supplies provider LGC for ТЃ3bn.

Unquote understands the entry multiple was slightly greater than 20x, returning 3x money for KKR for an IRR of 31%.

This is the first investment from Cinven's Seventh Cinven Fund, which closed on €10bn in May 2019. The vehicle deploys equity tickets of €200m. This is the third investment from Astorg's €4bn Astorg VII vehicle, which closed in January 2019.

KKR began searching for a sell-side adviser in July 2019, with first round bids for the auction process due on 8 October 2019, according to Unquote sister publication Mergermarket. The auction saw Advent International, Bain, Blackstone, Carlyle, Nordic Capital, Partners Group, US-based GTCR and a consortium of EQT and Novo Holdings bid for the company.

Unquote understands that the winning bidder's price was larger than the runner-up by a thin margin.

LGC was a KKR European Fund IV portfolio company. The fund closed on €3.3bn in 2015 and was 93% deployed as of September 2019. The fund has realised several assets including Software One, Webhelp and Välinge.

The company made 15 acquisitions during KKR's holding period, including Toronto Research Chemicals, SeraCare Life Sciences, Lucigen and BRC Global Standards, as well as divesting its forensics and security division.

Unquote understands the incoming consortium will take a similar buy-and-build strategy, geographically expanding both orginaically and through inorganic acquisitions.

As of 31 March 2019, LGC's debt stood at £862.5m in US-dollar- and euro-denominated syndicated loans and long-term loan notes, with equity and reserves of £540.6m.

Previous funding
In 2004, LGC agreed a deal with Legal & General Ventures (LGV) that saw the firm acquire 3i's stake in the company and become its majority shareholder. LGV held a 60-75% stake, while the management and other staff held the balance.

Bridgepoint agreed to acquire LGC in 2010 for £257m from LGV.

In 2014, ING and GE Capital led a refinancing of the company. Bank of Ireland, Commerzbank, Societe Generale and HSBC Bank were the bookrunners, with terms of the transaction agreed at £305m. Proceeds refinanced existing debt and repaid shareholder loan notes. Bridgepoint took a £120m dividend as part of the transaction.

Bridgepoint made 3x money on the £650m sale of LGC to KKR in 2015. Bridgepoint stated that, under its ownership, LGC tripled profits and almost doubled revenues from £130m in 2010 to £222m in 2015.

Company
LGC provides a range of measurement tools, proficiency testing schemes, supply chain assurance standards and specialty genomics reagents. The company provides products to the healthcare, agriculture and the environment sectors.

Established in 1842, LGC employs 3,200 people and is headquartered in Teddington. The company generated revenues of £387.4m and an adjusted EBITDA of £106.1m in the year ending 31 March 2019.

People
Astorg – Francois de Mitry (managing partner).
Cinven – Supraj Rajagopalanv (partner).
LGC – Tim Robinson (CEO).

Advisers
Equity – Morgan Stanley (M&A); Rothschild (M&A).
Vendor – JP Morgan (corporate finance).