Verna Group (United Kingdom) - Jan 2008

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01 January 2008

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Bank of Scotland Integrated Finance (BOSIF) has acquired infection control products business Verna Group from LGV Capital in a secondary management buyout. The value of the deal was not disclosed. BOSIF invested a combined debt and equity package to facilitate the deal which sees it taking a minority stake in the newco alongside majority shareholders management.

The sale generated an IRR reported to be in the 20-30% range for LGV on its two-and-a-half-year investment period. PricewaterhouseCoopers ran an auction process to facilitate the exit, the timing of which was prompted by a number of pre-emptive offers which led LGV to conclude there was suitable interest in the business to sell it. LGV had already realised some value from the company via a refinancing by Bank of Ireland completed in June 2007.

LGV bought Verna Group in a deal reported to weigh in at approximately £60m in May 2005 (2 May 2005, page 18). The 2005 buyout was financed by debt provided by Bank of Ireland and Scotia Bank. LGV owned an 81% stake in the company. Over the course of LGV’s investment, the business grew by the opening of a new office in South Africa and through an investment of £1.5m in the Bolton factory which supported a new automation project. LGV also led a process of divestment with Verna selling a series of non-core businesses enabling it to focus on the expansion of its core infection control offerings.

Bolton-based Verna is a manufacturer and supplier of infection control products for the healthcare sector and is a top 30 supplier to the NHS. Its products are exported to 46 countries and are used in 85% of UK hospitals. Verna was established in 1960.

Catherine Houghton, James Argyle, Tavia Sparks, Christopher Hopwood and Donald Fowler led the deal for BOSIF. Bill Priestley led the exit deal for LGV. Karen Haslam is the CEO of Verna.

Advisers

Vendor - PricewaterhouseCoopers, Colin Gilespie, Nick Jones, Sarah Wilkinson, Stuart Warriner, Vanessa Jones (Corporate Finance)Vendor - Taylor Wessing, Eleanor West, Martin Winter (Legal)