According to The New York Times, on Wednesday, Goldman Sachs Capital Partners, a private equity unit of The Goldman Sachs Group Inc. (GS) and Cinven Limited, a European buyout firm, agreed to sell Nordic manufacturing supplier Ahlsell to CVC Capital Partners in a EUR1.8 billion ($2.4 billion) deal. This agreement demonstrates the largest private equity deal in Europe since the commencement of the sovereign debt crisis.
The deal yields significant return for Goldman and Cinven over their initial investment in Ahlsell.
Founded in 1877, Ahlsell was purchased by Cinven and Goldman in January 2006 from Stockholm-based private equity firm, Nordic Capital. The deal was valued at EUR1.2 billion ($1.6 billion) at the time of purchase.
After buying Ahlsell, Cinven and Goldman expanded the company through 25 acquisitions and investments. Currently, Ahlsell is a market leader in Nordic for supplying products, which include heating and plumbing products, tools, electrical components, refrigeration and machinery. The company has grown organically to a larger extent.
Moreover, Goldman and Cinven branched out the product range of Ahlsell and incurred considerable capital expenditures for the growth of the company. Recently they decided to build a Norwegian central warehousing facility for Ahlsell.
In 2011, Ahlsell recorded revenue of EUR2.3 billion, climbing 6.1%. Moreover, earnings of the company surged 28.2%. Therefore, amidst a global recession, Ahlsell has succeeded in reporting significant growth in its revenue and earnings. This depicts the stability of the business and its continuing growth.
On the other hand, CVC Capital Partners looks forward to expand Ahlsell through acquisitions and make it more profitable over the long term.
Founded in 1981, CVC Capital Partners is one of the greatest private equity firms in the world. Since 1981, the firm has concluded over 250 investments globally. It executes a network of 18 offices all over Europe, Asia and the United States.
Goldman and Nordea Bank AB acted as advisors to Cinven and Goldman Capital Partners, while Deutsche Bank AG (DB) advised CVC over the deal.
However, in February, Goldman Capital Partners and Advent International, agreed to purchase credit-reporting firm TransUnion Corp from Chicago-based billionaires – Madison Dearborn Partners and the Pritzker family- in a $3 billion deal. The agreement is expected to be completed by early in the second quarter of 2012.
Following the completion of the takeover, Advent and Goldman look forward to provide their clients with continual services and superior information. They are also planning to supply risk management products in the US as well as in other key growth markets.
Goldman currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we maintain a long-term Neutral recommendation on the stock.
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