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Carlyle Caps Prolific Summer, Is Bullish On Automotive

Target:DuPont’s vehicle and industrial coatings systems business

Price: $4.9 billion

Sponsor: The Carlyle Group

Seller: DuPont Co.

It was the 12th new investment or investment proposal Carlyle agreed to since July 1 alone. By contrast, Kohlberg Kravis Roberts & Co. executed three new deals, while The Blackstone Group and Apollo Global Management executed one and zero deals, respectively, according to Capital IQ. Other Carlyle deals since July 1 include its agreement to buy Getty Images Inc. from Hellman & Friedman LLC for $3.3 billion and its offer to buy Hong Kong-based digital media company Focus Media Holding Ltd for $3.5 billion.

A few factors have led to the flurry of deal activity, including the availability of financing for good companies and corporations looking to divest assets not central to their business, Greg Ledford, a Carlyle managing director who leads the firms industrial and transportation team, told Buyouts. There was also a certain amount of coincidence, Ledford said, noting that the deals were struck by a variety of teams around the world and that the firm had been working on some of them for years. His team had been talking to DuPont management for two- to two-and-a-half years.

“It’s not like they just showed up on our desk and we said, ‘Let’s put some money to work,’” he said.

DuPont Performance Coatings employs more than 11,000 workers and  is expected to post more than $4 billion in sales in 2012, according to a press release. The purchase price is 7.8x the company’s projected 2012 EBITDA. Carlyle will make the investment out of Carlyle Partners V LP, its $13.7 billion U.S. buyout fund, and Carlyle European Partners III LP, a $5.4 billion fund.

Carlyle liked the diversity of the company’s business, which supplies coatings to approximately 80,000 customers in 120 countries. The firm sees an opportunity to expand further into emerging markets, especially Brazil and China, where more people entering the middle class are spending more on cars. And it liked the stability of the auto refinishing and collision repair business, which the firm sees as a stable generator of recurring revenue.

Indeed, the DuPont acquisition comes barely a week after Carlyle closed another acquisition in the automotive sector. On Aug. 20, the Washington, D.C.-based firm closed its acquisition of Service King Paint & Body LLC, a Richardson, Texas-based chain of collision repair services. Ledford said research showing that cars on the road today tend to be older, which means they’ll need to be worked on, while buyers of new cars are more interested in fuel efficiency, is bolstering the firm’s interest in the automotive industry. Carlyle remains opportunistic about deals in the sector.

 “I think all of those factors from  a macro standpoint bode well for the domestic auto market,” he said.

Carlyle’s past investments in the sector have included Allison Transmission and Hertz.