When two heavy-hitters team up, big things happen. In December, after six months of touch-and-go negotiations, the team of Kohlberg Kravis Roberts & Co. and Wendel Investissement finalized their purchase of Legrand, a manufacturer of low-voltage electrical fittings and accessories.
At E3.7 billion, the acquisition is one of the largest LBO ever in Europe, and KKR’s first in France.
The duo supplied a total of E1.317 billion, with minority investors – including West LB, HSBC and Goldman Sachs Capital Partners contributing the remainder – bringing the equity stake to a whopping E1.76 billion.
The balance of the transaction was financed with E1.82 billion of senior debt and E600 million of mezzanine debt.
In October 2001, it looked liked the strategic company Schneider Electric had a deal all but sewn up to purchase Legrand for E5.4 billion. That is, until the European Commission stepped in and red-flagged the deal, which subsequently barred the company from owning Legrand due to the monopoly created from the transaction.
By June 2002, after Schneider reached an agreement to unload Legrand to Wendel for E3.7 billion, the European Court stepped in and ruled that the EC’s decision would be overturned, thereby allowing Schneider to continue ownership of Legrand. Schneider decided to go ahead with the sale to the Wendel consortium anyway, stating the EC’s “hostility to the merger” as a reason for sale.
After Schneider made the announcement Dec. 3 that it would not go through with the merger, the buying group immediately responded and closed the deal just seven days later.