Target: Flint Ink Corp
Price: $3 billion
Sponsors: Koch Industries, Goldman Sachs
Seller: CVC Capital Partners
The deal values Flint at more than 2.2 billion euros ($3 billion) and will cut its debt, enabling it to acquire competitors in coming years, two people familiar with the transaction told sister news service Reuters. “We want to grow Flint organically, but also with acquisitions and already have a list of potential takeover targets,” said Martin Hintze, Goldman Sachs’s co-head of corporate equity investing in Europe.
The Luxembourg-based group makes just over half of its profit in the packaging industry, while inks for the printing industry account for the rest. As demand for ink to print newspapers and magazines declines, the new owners want to shift Flint’s focus increasingly towards packaging.
Koch, which is one of the largest privately held companies in the United States, and Goldman Sachs have agreed to reduce Flint’s debt by 20 percent from the current roughly 1.8 billion euros and have secured better terms for the remaining debt, Hintze said.
In 2013 Flint, which has roughly 6,600 staff and has annual sales of 2.2 billion euros, saw EBITDA rise by 5 percent to about 325 million euros. Flint’s two biggest rivals are Sun Chemical, owned by Dainippon Ink & Chemicals, and Germany’s Siegwerk Druckfarben.
The sale comes after several unsuccessful attempts by CVC to sell the company over the last couple of years. In 2010 CVC unsuccessfully tried to list Flint, having built up the company by combining ink businesses bought from BASF and Akzo Nobel in 2004 and a year later merging it with U.S.-based Flint Ink Corp.
About a year ago, Goldman and Koch started working on a potential Flint acquisition and eventually entered exclusive negotiations with CVC, two people familiar with the transaction said. No formal auction process was ever launched because CVC had assessed the offer price as being attractive, they added.
CVC’s return on the Flint investment is in line with the buyout group’s average profit it makes when buying and selling companies, another person familiar with the deal said. CVC already got its initial investment back plus made some money from it in 2006 when it paid itself a dividend following a 500 million euro recapitalization of Flint.
Banks have lined up 1.7 billion euros of debt financing to back Koch and Goldman’s acquisition of Flint, banking sources said. Deutsche Bank, Morgan Stanley, Barclays and Goldman Sachs are leading the all-loan financing which will include a term loan B, second line tranche and revolving credit facility, denominated in euros and dollars, the banking sources said.
The financing is expected to launch for syndication to investors in April with bank meetings taking place after Easter, they added.
Arno Schuetze and Alexander Hübner are correspondents for Reuters in Frankfurt. Additional reporting by Claire Ruckin in London.