In Jun-02 Clayton Dubilier & Rice acquired U.K. food service company Brake Bros Plc in a public tender offer for 825 pence per share valuing the equity at £434m. Including £132m in net debt (at 31-Dec-01) the total consideration amounted to £566m.
This implied the following multiples: 41% of sales for 2001 (£1.38bn, 5.8x net tangible capital turn), 8.0x EBITDA for 2001 (US$71m – before goodwill amortization and exceptional items -, 5.1% margin), 11.6x EBITA for 2001 (£49m – idem – , 3.5% margin) and 19.3x net profit for 2001 (£29m – idem -, 2.1% margin).
The transaction was financed with £220m in senior debt (3.1x EBITDA), £175m in high-yield notes (total debt 5.6x EBITDA), £270m in equity (60/40 debt to equity) and £75m in revolvers. These conservative leverage ratios clearly reflect the painful US Office Products experience.
In Feb-95 Kraft Foods sold its Kraft Foodservice distribution business to Clayton Dubilier & Rice (CD&R) for US$690m.
This implied the following multiples: 17% of sales for 1994 (US$4.13bn), 11.1x estimated EBITA (US$62m, estimated margin 1.5%). The transaction was financed with around US$200m in equity and a US$580m loan facility (71/29 debt to equity). The company was subsequently renamed Alliant Exchange.
In Nov-01 Ahold subsidiary U.S. Foodservice acquired 100% of the shares of Alliant Exchange for US$1.48bn in cash, and assumed US$436m in consolidated debt and US$325m in off balance sheet securitized receivables for a total consideration of US$2.26bn.
This implied the following multipes: 34% of sales for 2000 (US$6.6bn), 13.0x EBITDA for 2000 (US$174m, 2.6% margin), and 4x net tangible capital employed (US$486m). No further details were disclosed.
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.
