Paris-based buyout firm LBO France has entered into exclusive negotiations to buy Terreal, a tile manufacturer valued at €860m including debt. Terreal is being advised by Goldman Sachs and is majority-owned by Carlyle. Eurazeo, the French investment firm, has a further 40% stake, while management holds about 5%.
Eurazeo and Carlyle bought Terreal in September 2003 for €400m, including debt from ING, from buildings group Saint-Gobain. They refinanced the company last December using €420m of debt.
Austrian building materials group Wienerberger and French buyout firm PAI Partners had been considering an acquisition of Terreal but appear to have lost out to LBO France, which was advised by Rothschild.
LBO France also gained exclusivity this month to buy Wheelabrator Allevard, a manufacturing services company, for €415m from rival French buyout firm Wendel Investissement.
The pending acquisition of Terreal from vendors led by Carlyle is no surprise. LBO France has had a strong relationship with the firm. Carlyle was part of a consortium that sold Materis, formerly Lafarge Specialty Materials, to LBO France for €1.1bn. The selling consortium also included CVC Capital Partners and Advent International.
Lafarge had kept a 33% stake in Materis when it was sold for an enterprise value of €890m in 2001, including about €170m of equity from the private equity firms.
The Terreal deal was Eurazeo’s fifth since deciding in 2001 to move from an investment holding company to a more active leveraged buyout firm. On July 13 it bought Financiere Galaxie, a French budget hotels chain, from Duke Street Capital. (See page 8).