Wolseley, the UK-listed distributor of building materials, has agreed to acquire DT Group (formerly known as Danske Traelast), the Nordic distributor of building materials from CVC Capital Partners for an enterprise value of €1.98bn ((US$2.5bn), including €484m of debt.
CVC acquired its stake in 2003 in a public-to-private of Danske Traelastkompagni. A source believes that the total consideration including debt amounted to DKR6.3bn (US$1.1bn). The tender offer amounted to DKR171 per share, or a total purchase price of DKR4.04bn (US$585m).
Using a typical capital structure for this kind of transaction of roughly 30% equity against 70% debt, this translates into an equity investment of US$330m or about one sixth of the cash consideration that CVC is selling the business for.
The source furthermore claims that CVC already recouped its original when refinancing DT Group’s debt in 2004 and 2005.
Peter Törnquist, senior managing director at CVC Capital Partners and chairman of DT Group, said that CVC had helped DT Group’s revenues grow by about 20% and profits by 40% during its stewardship. “Under the ownership of CVC, DT Group has built a solid track record with an impressive management team. Steen Weirsoe, CEO of DT Group, and his management team have reinforced the Group’s leading position in the Nordic region and established a very attractive platform for future profitable growth.”
The acquisition of DT Group will take Wolseley’s gearing to approximately 128% with pro-forma interest cover (before amortisation of intangibles) in excess of 7 times.
Wolseley was advised by Lehman Brothers on this latest transaction. UBS is acting as corporate broker to Wolseley on this transaction.