Top 5 exits of 2012 so far

Greg Gille
30 August 2012

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While the exits completed by European private equity firms this year have failed to match the best home runs of 2011 returns-wise, a handful have nonetheless impressed with hefty valuations. unquoteт looks back on 2012тs largest exits

5) Ahlsell – €1.8bn

Cinven and Goldman Sachs Capital Partners (GSCP) bought Sweden-based Ahlsell in late 2005 for almost €1.3bn from Nordic Capital, with each party reportedly owning 48% of the company. The two GPs sold the business to CVC in February, reaping an IRR in excess of 20% on their original investments.

Ahlsell is a Swedish distributor of tools and construction equipment, founded in 1877 and headquartered in Stockholm. It posted a turnover of around SEK 19bn in 2011, against SEK 17bn at the time of Cinven and GSCP's investment. Interestingly, CVC was said to have been among the bidders in the 2005 buyout.

4) BSN Medical – €1.82bn

In fourth place comes another secondary transaction, this time in Germany. Montagu wholly acquired medical supplies manufacturer BSN Medical from trade players Smith & Nephew and Beiersdorf for €1.03bn in 2006. It sold the company to EQT in June for €1.82bn.

Equity for the 2006 transaction was invested from Montagu III. It was reported at the time that Montagu secured a 7x EBITDA debt package, corresponding to a 65% leverage ratio, from JP Morgan and Mizuho Corporate Bank. BSN generated a €525m turnover in 2005, compared to €665m when EQT took it over. Meanwhile, headcount rose from 3,400 to 4,000.

3) StarBev – €2.65bn

The third deal in our list is a noticeable step-up value-wise; breaks away from the SBO motif; and sees CVC putting its vendor hat on. The GP sold CEE-focused brewer StarBev to NYSE-listed Molson Coors Brewing Company for €2.65bn in April.

CVC acquired the Central and Eastern European operations of brewery Anheuser-Busch InBev (AB InBev) in a $2.23bn deal in 2009. A senior debt facility of approximately £1bn was provided by international and regional banks to support the deal.

StarBev brews approximately 13 million hectolitres of beer per year. Its brands include local beers such as Borsodi, Kamenitza, Bergenbier, Ožujsko, Jelen and Nikšicko. The group also distributes the Stella Artois, Becks, Hoegaarden, Löwenbräu and Leffe brands under licence. StarBev posted a €700m turnover and €241m EBITDA in 2011.

2) NDS Group – $5bn

CVC was not the only private equity house to benefit from large US corporates shopping in Europe in the first months of 2012: in March, Permira reached an agreement to sell NDS Group to Cisco Systems for approximately $5bn, including $1bn debt. The company had also explored IPO options with the US Securities and Exchange Commission but these plans were ultimately dropped.

Permira took the Nasdaq-listed company private in a $3.6bn deal in 2009, which saw News Corporation's stake in NDS reduced by about a third. The London-based company specialises in secure software solutions for pay-TV providers such as BSkyB, Direct TV and over 90 others worldwide. NDS was 51% owned by Permira prior to the sale, while News Corporation held a 49% stake.

1) Alliance Boots – c£10bn (partial exit)

Our chart-topper sees buyout giants KKR and AXA Private Equity in a position to reap one of this year's largest windfalls: the firms made a partial exit from Alliance Boots following a cash and shares offer from US pharmaceutical retailer Walgreens in June. The deal saw Walgreens take a 45% stake in Alliance Boots for around £4.3bn, and the company will have the option to buy the remaining Boots shares by 2015.

KKR and AXA PE took Alliance Boots private in June 2007, in what remains the largest private equity-backed buyout in Europe. The deal valued the UK retailer at £11.1bn, and was leveraged with around £7.45bn of senior debt and £750m of mezzanine.

Boots' revenues have increased dramatically since then, from £14.6bn at the time of the 2007 take-private to £23bn in the year ending 31 March 2012.

These impressive exits should be welcome news on at least two fronts. The top three show that trade sales are once again a viable exit route at the upper end of the market, and that large-cap GPs aren't condemned to swap assets between themselves ad nauseam. But they also highlight that some of the best European businesses are still attractive to US buyers, despite the Old Continent's current woes.