CVC launches bid to buy back Ahlsell

February 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2019 Issue

London-based private equity giant CVC Capital Partners has launched a $2bn all-cash offer to buy back Swedish building materials group Ahlsell AB just two years after listing it.

CVC’s offer of 55 Swedish crowns per share, which is being made through the newly formed Quimper AB, a CVC-backed entity, represents a premium of 32.5 percent to the company’s closing price on Monday 10 December, the day before the deal was received. The price offered also represents a premium of 23.9 percent compared to the price in its 2016 initial public offering of Ahlsell, including paid out dividends since the listing. Prior to the offer, Ahlsell had been trading at below its IPO price; however, its shares were up 30 percent the day after news of the deal became public.

CVC has said that its offer for Ahlsell will not increase, and thus is a ‘take it or leave it’ deal. CVC is already Ahlsell’s biggest shareholder with a 25 percent stake in the company. In February 2012, CVC agreed to buy the business from Cinven and Goldman Sachs Capital Partners, in a deal worth €1.8bn, however it gradually reduced its holding in the company over the next four years.

“We are very excited by the opportunity for CVC Funds to continue their long-standing partnership with Ahlsell, which we believe is a true industry leader with a multi-channel approach and a robust business model,” said Søren Vestergaard-Poulsen, a managing partner at CVC. “Our experience and history with the company provides us with the ability to help it grow further across its core segments and industries, delivering top quality services and value for all stakeholders. We look forward to continuing to work with the existing management team at Ahlsell and develop the company further under private ownership. We believe that the offer price represents a full and fair valuation for Ahlsell. Given the specific circumstances of the offer for Ahlsell – including CVC Funds’ existing stake in Ahlsell – and in the interests of maximising transparency and bringing the offer to a conclusion in a timely manner, Quimper is presenting the market with a best-and-final offer price that cannot be increased.”

Following the announcement of the offer, Ahlsell’s board of directors appointed an independent bid committee compromised of board members Satu Huber, Magdalena Gerger, Susanne Ehnbåge and Terje Venold to consider the offer.

“I look forward to leading the work of the committee and will shortly present the financial advisors chosen,” said Ms Huber. “We will do a thorough analysis and work for the best interests of all shareholders. We will publish our statement well in advance, and no later than two weeks before the end of the acceptance period.”

The acceptance period for the offer is scheduled to start on or around 20 December 2018 and end on 11 February 2019. The closing of the offer is contingent on the offer being accepted to such extent that Quimper becomes the owner of more than 90 percent of Ahlsell’s total outstanding shares, the absence of a more favourable third-party offer and regulatory approvals, among other conditions.

Stockholm-based Ahsell, which was founded in 1877, distributes installation products, professional tools and supplies to construction companies, facility managers, industrial customers and power companies in the Nordic region.

CVC said Ahlsell had a strong track record both under private and public ownership, but noted Ahlsell may be moving into a different phase of its business and economic cycle with a softer outlook for construction and industrial activity, and uncertainty in the overall domestic and global markets.

CVC has agreed a number of deals in recent months. In November 2018, it agreed to acquire Israeli medical device business Lumenis from XIO Group in a $1bn deal. The firm also agreed a €3bn deal to gain control of listed Italian drug manufacturer Recordati in June 2018.

Richard Summerfield