Legrand raised €972m at the IPO, giving it a market capitalisation of €5.4bn, and another €129m has been raised following the exercise of the over-allotment option. Private equity owners KKR and Wendel Investissement, who acquired Legrand in a €5bn LBO in 2002, have cut their combined stake from 75% to 60% (30% each achieving a return of over 30%) following the float, along with minority investors, Goldman Sachs Capital Partners, Montagu Private Equity and WestLB, who all now own a total of 15%, with management holding 4%.
The €5bn buyout of Legrand from Schneider Electric in 2002 was at the time one of the largest LBOs in France. The financing of the acquisition was structured as follows: the funds provided by the Wendel Consortium amounted to €1.76bn. Wendel Investissement and KKR each invested around €650m. The various investors participating in the Wendel Consortium invested €444m: West LB (€200m), HSBC Private Equity (€115m), Goldman Sachs Capital Partners (€100m) and the Verspieren and Decoster families, the founders of Legrand (€29m). A €150m vendor loan was also provided by Schneider Electric. New external debt amounted to €2.432bn (of which €1.832bn was in the form of senior bank debt and €600m in the form of mezzanine debt). Wendel Investissement and KKR, who became shareholders of approximately 75% of the share capital of the company, each held three seats on the controlling company’s board of directors, chaired by Ernest-Antoine
Seillière, together with the managers of Legrand (3 seats) and the minority shareholders (2 seats).
Through the acquisition the Wendel consortium reinforced the leading position of Legrand in the low voltage electrical equipment market. The transaction was also KKR’s first investment in France.
Jean-Bernard Lafonta, chairman of Wendel Investissement’s management board, said: “Wendel has lent its strength to the strategic development of Legrand, particularly in the process and politics of acquisitions. During 2005, for around €400m, several targeted acquisitions were made which allowed Legrand to extend its range of products, to reach new markets, and to gain strength in its existing markets.” In addition, much of the cash made available following improvements in productivity has been re-invested in commercial development and innovation. Since the last quarter of 2004, Legrand has acquired six businesses, all leaders in their own fields. These include TCL International Electrical, a leader in wiring devices in China; Shidean, a Chinese audio and video entry systems business; Cablofil, a French wire cable trays company; OnQ, a leader in structural wiring for residential cabling in the US; Van Geel, the number one in metal cable management systems in the Netherlands and Zucchini, a leader in prefabricated electrical cabling busbar systems in Italy.