News - Midlands
Remember four years, ago when the £3441m take-private deal of Midland baby seat manufacturer Britax was one of the region's most celebrated deals?
Well in 2005 the Britax story returned to the headlines when the childcare division of the Warwick-based business changed hands again, this time in a £3230m buyout by Carlyle Private Equity.
The deal was a highlight for several Midland advisers in 2005, not least Barclays Leveraged Finance which had a long-standing relationship with the group and underwrote a good chunk of the debt.
Ian Tetsill, head of the bank's Midland team, says the relationship put his team in position when Britax announced it was disposing.
"Having been selected as the stapled debt offer during the early part of the auction process, our strategy was to use this position to get close to management, its advisers and the company, which included undertaking site visits in Europe and the US," recounts Tetsill.
The deal was also a highlight for Catalyst Corporate Finance, which advised the management.
"We're continuing to work with the company, running workshops for the divisional finance directors, explaining how to operate within leveraged environments, and supporting the syndication process," says Catalyst.
Such big ticket private equity deals advised out of Birmingham were rather thin on the ground in 2005, although one of the most impressive - another example of a secondary buyout - was the exit of ISIS Equity Partners from clothing retailer Fat Face.
Fat Face was ISIS' first investment following the opening of its Birmingham office in 2000. It invested £33.5m in development capital and cashout for the firm's two founders.
The clothing retailer was subsequently sold in a secondary buyout, this time advised by Rothschild in Birmingham, in April 2005. In all this yielded ISIS Equity a return of 11.9 times on its initial investment.
ISIS' Mark Advani recalls:"In the interim we worked with the founders to roll out an additional 80 stores, grow profits tenfold, revenue eightfold and recruit a successor management team that allowed the founders to exit with us."
HSBC also picked out a secondary buyout as its highlight, this time the £350m buyout of value books retailer The Works, based in Solihull, by the management team and Hermes Private Equity.
Says HSBC: "The buyout was conducted through a private equity auction and required us to include a staple debt offer. We invested significant up-front effort in putting our offer together. However it ensured we were able to deliver on the offer we made."
Staying with private equity, East Midland law firm Geldards flagged up the £347m acquisition of Superglass Insulation, where it acted for NBGI Private Equity through the institutional buyout from 3i-backed Encon Group. However Encon was itself up for sale.
Recalls Geldards corporate partner Andrew Borkowski: "Keys to the deal were seller warranty arrangements and restrictive covenants while not knowing the identity of the potential acquirer of Encon."
3i's highlight was its £341m investment in Midlands-based Hayley Conference Centres. Ironically, despite the high profile closure of its Birmingham city centre office, 3i was very active in the Midlands during 2005, investing £395m in four companies - Interflora, Pharmaceutical Profiles and Farrow House - as well as Hayley.
On the M&A front, Clearwater Corporate Finance's highlight illustrates some key themes in the market.
Its deal, led by partner Andy Moore, was Indian automotive component manufacturer Amtek Auto's acquisition of Zelte, a turbo-charger machining company based near Frankfurt with revenues of more than £3100m.
Moore says the deal illustrates the increasing presence of Asian buyers in Europe and the role an international M&A network can play in such a deals.
Moore adds: "Our Birmingham office had previously sold a business to Amtek, and we also advised on a management buyout (MBO) of a business that exited through a sale to Amtek."
Many others also flagged up deals with an international flavour.
Corporate finance adviser Friend nominated a "double' MBO from Concentric Group, the Midlands-based engineering conglomerate.
Friend advised one of the directors in buying out two Concentric subsidiaries - Delta Controls in Surrey and Weed Instruments in Texas.
Friend's Mike Yiannis recalls: "This was a long, drawn out and complex double deal which involved two debt-only, vendor assisted acquisitions, in different time zones and jurisdictions, with a major pensions issue, a counter-bidding secondary management team and last minute financial assistance complexities." Phew!
Bank of Scotland also headed to the US for its deal of the year, in the shape of two acquisitions - still subject to shareholder approval - by Brierley Hill-based aerospace and automotive engineering group Hampson Industries.
The acquisitions, for £346.7m, were of Coast Composites, a manufacturer of tooling systems for composite structures, and Lamsco West, a supplier of sheet materials. Both businesses are based in California.
The acquisitions were funded through a combination of a share placing and a new £380m revolving credit facility.
On a more continental theme Bridgepoint, the private equity house, highlighted the acquisition of Access France by Safestore.
Safestore was created by a £340m buyout, via a de-listing of Safestore in 2003, to which Bridgepoint added Mentmore via a £3209m de-listing the following year.
"It required a Birmingham-led team to negotiate a French acquisition from an American vendor," says Adrian Willetts from Bridgepoint.
"Access France was the acquisition of 22 self-storage facilities principally in central Paris."
Tenon Corporate Finance also worked with continental partners on the sale of Nottingham-based Goodmarriott & Hursthouse, the electrical and mechanical services company.
The acquisition was by technical services specialist Imtech, a major listed company with annual revenues of more than x802bn.
Says Tenon: "We identified Imtech as one of a shortlist of preferred strategic buyers, and it was the strong European growth strategy of Imtech that made for such a natural fit."
Meanwhile the strong links between the Midland advisory community and Iceland, so memorably illustrated in a string of deals involving Baugur last year, were maintained in 2005 by law firm Eversheds.
Eversheds highlighted the £3485m acquisition of food producer Geest by Icelandic food group Bakkavor.
The deal was led by Eversheds' Guy Green out of the firm's Birmingham office.
He said "This was a real David and Goliath deal. What made it exceptional was that it involved an entrepreneurial-run business, which has a turnover of £3150m, successfully buying out Geest, which has sales of £3850m."
Talking of food, another law firm, Cobbetts, also singled out a tasty deal, this time the double acquisition of JJ Barker and W Bailey by Midlands-based Bomfords.
Bomfords is a major grower of salad, vegetables and legumes crops, with a turnover of more than £3150m and employing more than 26,000 people.
Says Cobbetts' Graham Muth: "The acquisition of both businesses added significantly to the overall strength of the group, complementing Bomfords' core product range and helping expand its product offering,"
The acquisition of Corby-based Flavours Direct by German-based Symrise was also a highlight for MacIntyre Hudson.
Rabby Persaud from MacIntryre says the acquisition by Symrise will support their strategy of building core competencies in the UK.
The leisure sector also proved ripe for activity. James Grenfell, Insider's Dealmaker of the Year from Kroll Corporate Finance, highlights the £380m sale of the SFI Group - owner of the Slug and Lettuce, Litten Tree and Bar Med branded bars - to the Laurel Pub Company, owned by property investor Robert Tchenguiz.
Grenfell adds: "Our corporate finance team was brought in to advise SFI, which was experiencing financial difficulties and to protect stakeholder value.
"A strategic review concluded that a quick sale of the profitable businesses within the group could be achieved, but the value could only be extracted if loss making sites were excluded from the sale.
"Our M&A team used its expertise in the leisure sector to identify the right buyer, and achieve a premium price for the profitable parts of the group of £380m."
Tchenguiz also figured in another highlight, this time from East Midland law firm Freeth Cartwright, where a team led by head of corporate Karl Jansen acted on the £379m sale of Derby-based Heritage Pub Company, which owned a tenanted estate of 231 pubs, to the Globe Pub Company.
Jansen recalls: "M&A activity in the pub sector has been strong again in 2005. This was the latest in a string of recent deals involving Tchenguiz and his investment vehicle, R20. It followed the acquisitions of Laurel Pub Company, Yates Group and 364 pubs from Spirit Group."
Staying on the leisure theme, a team from law firm Hammonds in Birmingham advised The Nightclub Company on the disposal of ten nightclubs to Luminar Group in a deal worth £39.8m. Midlands-based Nightclub owns a portfolio of nightclubs and bars across the UK, including The Works on Broad Street, Birmingham.
As ever, a sizeable chunk of deal highlights related to gaining a strong business foothold ahead of future legislative changes.
Barclays Private Equity (BPE) chose the acquisition of Reeds Rains, the largest independent estate agency in the North of England, with a turnover in excess of £330m, by property services group Lending Solutions.
Says BPE director Phil Griesbach: "Lending Solutions is gearing up for the launch of Home Information Packs in 2007 which it expects to not only increase the demand for surveying services, but also ensure that estate agents play an even more important part in delivering an integrated service to the customer."
Meanwhile BDO Stoy Hayward advised on the £342m MBO of social housing contractor Bullock Construction from AIM- listed Montpellier.
Head of corporate Roger Buckley describes the deal as a "triumph for management persistence and resolve" in the face of significant interest from trade buyers and institutional investors.
In the wider public sector, education appears one area where deals appear just waiting to be done.
For instance both Deloitte and law firm Browne Jacobson nominated the multi-million pound acquisition of a clutch of schools from the Hesley Group by private equity fund GI Partners.
Hesley, which provides residential education and care services to young people with learning difficulties, sold its operations in the south for more than £3100m.
In a similar vein Gateley Wareing completed the MBO of Ross-on-Wye based PGL Voyages, a children's centre-based adventure holiday company with operations across the UK and France, for £342m.
Gateley says it had been tracking the business for a number of years, adding: "As a niche travel business it operates in a sector where there has been and will continue to be some significant consolidation."
Staying with education, 2005 also saw Bank of Scotland re-bank Options Group, which provides health care, education and rehabilitation to children and young people with special needs.
Options provides services to more than 50 local authorities across the country who presently refer children and young people to them. The bank provided term and working capital to support the expansion of all divisions.
A refinancing was also trailed by Royal Bank of Scotland in the shape of the £343m refinancing of Smethwick-based Avery Weigh-Tronix, a world-wide leader in the design, manufacture and supply of industrial and food retail weighing products.
RBS says: "We welcomed the opportunity to back the management team led by chief executive Jerry Bowe.
"The company has a broad range of high quality products, strong brand names and a reputation for innovation, design and product development."
In the public markets arena Ernst & Young highlighted the listing of Tamworth-based Foseco, the manufacturer of consumable products for foundries and the steel industry.
CareTech's flotation on AIM, deal of the year for law firm Pinsent Masons, was described by partner Andrew Hornigold as a "watershed for private equity healthcare investment". CareTech was the first ever care homes provider in the UK to float and is now a model for others.
Meanwhile commercial property was another sector which saw a flurry of deal activity in 2005.
Law firm Martineau Johnson highlighted the MBO of property and development solutions consultancy DBK Back, which has its head office in Birmingham, and offices in London and Manchester.
And there was also room for plenty of deals around tomorrow's technology.
For instance Cattles Invoice Finance provided Birmingham-based True Information Technology with a £3500,000 funding line that is set to double the firm's turnover to £38m and create additional jobs. Catapult Venture Managers rounded off the year with its first investment from the Advantage Enterprise and Innovation Fund, namely a £31.75m investment in Coventry based RDM for the roll out of car security product Auto-txt.
RDM began developing the stolen vehicle protection and tracking system in 2001. David Keene, managing director, said the funding would enable it to develop.
And deals were also still to be done in more traditional sectors.
RSM Robson Rhodes highlighted the MBO of Solihull print management group Etrinsic, which has a £325m turnover.
Partner Martyn Pilley says: "Via a competitive debt process we maximised the lending from the available assets and, finally, by introducing a sale and leaseback property transaction, we delivered 100 per cent ownership of the business to the management team."
Big Deal!
Remember four years, ago when the £3441m take-private deal of Midland baby seat manufacturer Britax was one of the region's most celebrated deals?
Well in 2005 the Britax story returned to the headlines when the childcare division of the Warwick-based business changed hands again, this time in a £3230m buyout by Carlyle Private Equity.
The deal was a highlight for several Midland advisers in 2005, not least Barclays Leveraged Finance which had a long-standing relationship with the group and underwrote a good chunk of the debt.
Ian Tetsill, head of the bank's Midland team, says the relationship put his team in position when Britax announced it was disposing.
"Having been selected as the stapled debt offer during the early part of the auction process, our strategy was to use this position to get close to management, its advisers and the company, which included undertaking site visits in Europe and the US," recounts Tetsill.
The deal was also a highlight for Catalyst Corporate Finance, which advised the management.
"We're continuing to work with the company, running workshops for the divisional finance directors, explaining how to operate within leveraged environments, and supporting the syndication process," says Catalyst.
Such big ticket private equity deals advised out of Birmingham were rather thin on the ground in 2005, although one of the most impressive - another example of a secondary buyout - was the exit of ISIS Equity Partners from clothing retailer Fat Face.
Fat Face was ISIS' first investment following the opening of its Birmingham office in 2000. It invested £33.5m in development capital and cashout for the firm's two founders.
The clothing retailer was subsequently sold in a secondary buyout, this time advised by Rothschild in Birmingham, in April 2005. In all this yielded ISIS Equity a return of 11.9 times on its initial investment.
ISIS' Mark Advani recalls:"In the interim we worked with the founders to roll out an additional 80 stores, grow profits tenfold, revenue eightfold and recruit a successor management team that allowed the founders to exit with us."
HSBC also picked out a secondary buyout as its highlight, this time the £350m buyout of value books retailer The Works, based in Solihull, by the management team and Hermes Private Equity.
Says HSBC: "The buyout was conducted through a private equity auction and required us to include a staple debt offer. We invested significant up-front effort in putting our offer together. However it ensured we were able to deliver on the offer we made."
Staying with private equity, East Midland law firm Geldards flagged up the £347m acquisition of Superglass Insulation, where it acted for NBGI Private Equity through the institutional buyout from 3i-backed Encon Group. However Encon was itself up for sale.
Recalls Geldards corporate partner Andrew Borkowski: "Keys to the deal were seller warranty arrangements and restrictive covenants while not knowing the identity of the potential acquirer of Encon."
3i's highlight was its £341m investment in Midlands-based Hayley Conference Centres. Ironically, despite the high profile closure of its Birmingham city centre office, 3i was very active in the Midlands during 2005, investing £395m in four companies - Interflora, Pharmaceutical Profiles and Farrow House - as well as Hayley.
On the M&A front, Clearwater Corporate Finance's highlight illustrates some key themes in the market.
Its deal, led by partner Andy Moore, was Indian automotive component manufacturer Amtek Auto's acquisition of Zelte, a turbo-charger machining company based near Frankfurt with revenues of more than £3100m.
Moore says the deal illustrates the increasing presence of Asian buyers in Europe and the role an international M&A network can play in such a deals.
Moore adds: "Our Birmingham office had previously sold a business to Amtek, and we also advised on a management buyout (MBO) of a business that exited through a sale to Amtek."
Many others also flagged up deals with an international flavour.
Corporate finance adviser Friend nominated a "double' MBO from Concentric Group, the Midlands-based engineering conglomerate.
Friend advised one of the directors in buying out two Concentric subsidiaries - Delta Controls in Surrey and Weed Instruments in Texas.
Friend's Mike Yiannis recalls: "This was a long, drawn out and complex double deal which involved two debt-only, vendor assisted acquisitions, in different time zones and jurisdictions, with a major pensions issue, a counter-bidding secondary management team and last minute financial assistance complexities." Phew!
Bank of Scotland also headed to the US for its deal of the year, in the shape of two acquisitions - still subject to shareholder approval - by Brierley Hill-based aerospace and automotive engineering group Hampson Industries.
The acquisitions, for £346.7m, were of Coast Composites, a manufacturer of tooling systems for composite structures, and Lamsco West, a supplier of sheet materials. Both businesses are based in California.
The acquisitions were funded through a combination of a share placing and a new £380m revolving credit facility.
On a more continental theme Bridgepoint, the private equity house, highlighted the acquisition of Access France by Safestore.
Safestore was created by a £340m buyout, via a de-listing of Safestore in 2003, to which Bridgepoint added Mentmore via a £3209m de-listing the following year.
"It required a Birmingham-led team to negotiate a French acquisition from an American vendor," says Adrian Willetts from Bridgepoint.
"Access France was the acquisition of 22 self-storage facilities principally in central Paris."
Tenon Corporate Finance also worked with continental partners on the sale of Nottingham-based Goodmarriott & Hursthouse, the electrical and mechanical services company.
The acquisition was by technical services specialist Imtech, a major listed company with annual revenues of more than x802bn.
Says Tenon: "We identified Imtech as one of a shortlist of preferred strategic buyers, and it was the strong European growth strategy of Imtech that made for such a natural fit."
Meanwhile the strong links between the Midland advisory community and Iceland, so memorably illustrated in a string of deals involving Baugur last year, were maintained in 2005 by law firm Eversheds.
Eversheds highlighted the £3485m acquisition of food producer Geest by Icelandic food group Bakkavor.
The deal was led by Eversheds' Guy Green out of the firm's Birmingham office.
He said "This was a real David and Goliath deal. What made it exceptional was that it involved an entrepreneurial-run business, which has a turnover of £3150m, successfully buying out Geest, which has sales of £3850m."
Talking of food, another law firm, Cobbetts, also singled out a tasty deal, this time the double acquisition of JJ Barker and W Bailey by Midlands-based Bomfords.
Bomfords is a major grower of salad, vegetables and legumes crops, with a turnover of more than £3150m and employing more than 26,000 people.
Says Cobbetts' Graham Muth: "The acquisition of both businesses added significantly to the overall strength of the group, complementing Bomfords' core product range and helping expand its product offering,"
The acquisition of Corby-based Flavours Direct by German-based Symrise was also a highlight for MacIntyre Hudson.
Rabby Persaud from MacIntryre says the acquisition by Symrise will support their strategy of building core competencies in the UK.
The leisure sector also proved ripe for activity. James Grenfell, Insider's Dealmaker of the Year from Kroll Corporate Finance, highlights the £380m sale of the SFI Group - owner of the Slug and Lettuce, Litten Tree and Bar Med branded bars - to the Laurel Pub Company, owned by property investor Robert Tchenguiz.
Grenfell adds: "Our corporate finance team was brought in to advise SFI, which was experiencing financial difficulties and to protect stakeholder value.
"A strategic review concluded that a quick sale of the profitable businesses within the group could be achieved, but the value could only be extracted if loss making sites were excluded from the sale.
"Our M&A team used its expertise in the leisure sector to identify the right buyer, and achieve a premium price for the profitable parts of the group of £380m."
Tchenguiz also figured in another highlight, this time from East Midland law firm Freeth Cartwright, where a team led by head of corporate Karl Jansen acted on the £379m sale of Derby-based Heritage Pub Company, which owned a tenanted estate of 231 pubs, to the Globe Pub Company.
Jansen recalls: "M&A activity in the pub sector has been strong again in 2005. This was the latest in a string of recent deals involving Tchenguiz and his investment vehicle, R20. It followed the acquisitions of Laurel Pub Company, Yates Group and 364 pubs from Spirit Group."
Staying on the leisure theme, a team from law firm Hammonds in Birmingham advised The Nightclub Company on the disposal of ten nightclubs to Luminar Group in a deal worth £39.8m. Midlands-based Nightclub owns a portfolio of nightclubs and bars across the UK, including The Works on Broad Street, Birmingham.
As ever, a sizeable chunk of deal highlights related to gaining a strong business foothold ahead of future legislative changes.
Barclays Private Equity (BPE) chose the acquisition of Reeds Rains, the largest independent estate agency in the North of England, with a turnover in excess of £330m, by property services group Lending Solutions.
Says BPE director Phil Griesbach: "Lending Solutions is gearing up for the launch of Home Information Packs in 2007 which it expects to not only increase the demand for surveying services, but also ensure that estate agents play an even more important part in delivering an integrated service to the customer."
Meanwhile BDO Stoy Hayward advised on the £342m MBO of social housing contractor Bullock Construction from AIM- listed Montpellier.
Head of corporate Roger Buckley describes the deal as a "triumph for management persistence and resolve" in the face of significant interest from trade buyers and institutional investors.
In the wider public sector, education appears one area where deals appear just waiting to be done.
For instance both Deloitte and law firm Browne Jacobson nominated the multi-million pound acquisition of a clutch of schools from the Hesley Group by private equity fund GI Partners.
Hesley, which provides residential education and care services to young people with learning difficulties, sold its operations in the south for more than £3100m.
In a similar vein Gateley Wareing completed the MBO of Ross-on-Wye based PGL Voyages, a children's centre-based adventure holiday company with operations across the UK and France, for £342m.
Gateley says it had been tracking the business for a number of years, adding: "As a niche travel business it operates in a sector where there has been and will continue to be some significant consolidation."
Staying with education, 2005 also saw Bank of Scotland re-bank Options Group, which provides health care, education and rehabilitation to children and young people with special needs.
Options provides services to more than 50 local authorities across the country who presently refer children and young people to them. The bank provided term and working capital to support the expansion of all divisions.
A refinancing was also trailed by Royal Bank of Scotland in the shape of the £343m refinancing of Smethwick-based Avery Weigh-Tronix, a world-wide leader in the design, manufacture and supply of industrial and food retail weighing products.
RBS says: "We welcomed the opportunity to back the management team led by chief executive Jerry Bowe.
"The company has a broad range of high quality products, strong brand names and a reputation for innovation, design and product development."
In the public markets arena Ernst & Young highlighted the listing of Tamworth-based Foseco, the manufacturer of consumable products for foundries and the steel industry.
CareTech's flotation on AIM, deal of the year for law firm Pinsent Masons, was described by partner Andrew Hornigold as a "watershed for private equity healthcare investment". CareTech was the first ever care homes provider in the UK to float and is now a model for others.
Meanwhile commercial property was another sector which saw a flurry of deal activity in 2005.
Law firm Martineau Johnson highlighted the MBO of property and development solutions consultancy DBK Back, which has its head office in Birmingham, and offices in London and Manchester.
And there was also room for plenty of deals around tomorrow's technology.
For instance Cattles Invoice Finance provided Birmingham-based True Information Technology with a £3500,000 funding line that is set to double the firm's turnover to £38m and create additional jobs. Catapult Venture Managers rounded off the year with its first investment from the Advantage Enterprise and Innovation Fund, namely a £31.75m investment in Coventry based RDM for the roll out of car security product Auto-txt.
RDM began developing the stolen vehicle protection and tracking system in 2001. David Keene, managing director, said the funding would enable it to develop.
And deals were also still to be done in more traditional sectors.
RSM Robson Rhodes highlighted the MBO of Solihull print management group Etrinsic, which has a £325m turnover.
Partner Martyn Pilley says: "Via a competitive debt process we maximised the lending from the available assets and, finally, by introducing a sale and leaseback property transaction, we delivered 100 per cent ownership of the business to the management team."