as·si·du·i·ty

In Feb-04 affiliates of Bain Capital L.L.C. (‘Bain’) acquired the German chemical distributor Brenntag GmbH (‘Brenntag’ or ‘the company’) from Deutsche Bahn (‘DB’) for approximately €1,206m (€504m in cash and €702m in debt assumed, excluding direct acquisition costs). This implied the following multiples for the year ended 31-Dec-03: 28% of sales (€4.33bn, 4.0x net tangible capital turnover), 4.9x EBITDA (€245m, 5.7% margin), 6.5x EBITA (€184m, 4.3% margin) and 1.1x net tangible capital employed (€1.08bn).
The total transaction value of €1.4bn as announced in Dec-03 included DB’s steel trading division Interfer which was subsequently sold in Apr-04.
The acquisition was financed with borrowings of €792m (3.2x EBITDA) under a €1.07bn senior credit facility (4.4x EBITDA including a €154m revolving credit facility and a €150m acquisition facility), €173.5m of borrowings under a mezzanine credit facility (total debt 3.9x EBITDA) and €299m in equity (76/24 debt to equity) from Bain Capital (€293m) and management (€6m). The senior credit facility covenants required total leverage (total net debt to EBITDA) to be below 5.8:1 and senior leverage below 4.9:1 by 30-Sep-04 declining by approximately 60bp per annum. The mezzanine borrowings were supposed to be refinanced through the issue of senior notes. The issue was pulled in May-04 due to market conditions.
An interesting side note: in Sep-02 (just 15 months before Brenntag was sold to Bain) the company signed a joint venture agreement through which it obtained a 50% stake in the chemical distribution division of Wilhelm E.H. Biesterfeld GmbH & Co. KG (‘WEHB’). Under the terms of the agreement WEHB holds an option right to put (sell) its 50% stake to Brenntag in exchange for a cash amount of (half of) 8.5x average three year trailing EBIT of the Biesterfeld JV. This multiple is 26% higher than what Bain eventually paid for Brenntag itself (6.7x three year trailing average EBITA).

In May-04 Brenntag acquired the Polish chemical distributor Orlen Polimer Sp. z.o.o.