Platinum To Flip ACR In New Year –

The traditional five-year holding period seems to have gone by the wayside in today’s sellers’ market. As such, a number of recently agreed-to private equity exits include companies that went private not two years ago. One such deal is Platinum Equity’s agreement earlier this month to sell portfolio company ACR Logistics, which it acquired about 20 months ago, to Kuehne + Nagel International AG. The deal values ACR Logistics at ?490 million ($587 million), and the transaction is expected to close in January 2006.

ACR originally had been a division of Hays PLC, known as Hays Logistics, and was purchased by Platinum in February 2004 for approximately $174 million. The Los Angeles-based firm established it as a stand-alone platform and re-launched it under the ACR name. At the time of Platinum’s acquisition, ACR generated annual revenues just shy of $1.5 billion, and as a part of the transaction, Xavier Urbain resigned from the Hays’ board to take up his new post as ACR’s CEO.

For Platinum, the investment is defined as an exercise in driving operational improvements within the business and empowering the company’s management team to grow enterprise value. Accordingly, Platinum Chairman and CEO Tom Gores said that in the short period of Platinum’s ownership, the company was able to “solidify itself as a leader in the world of contract logistics.”

Today, Paris-based ACR expects to earn revenue in excess of ?1.3 billion (more than $1.55 billion) and an operating profit of about ?60 million (about $72 million) by year-end 2005. The company, which operates at 140 locations in 11 countries, provides supply-chain design; information systems and data management; distribution center and transport services; and asset management of returnable transport packaging and not-for-sale goods.

While ACR was a strong performer as an independent company, Gores said it will be a strong asset once it is incorporated into Kuehne + Nagel, too. Whereas Kuehne + Nagel concentrates on the automotive and aviation, high-tech, pharmaceutical, industrial and chemical goods industries, ACR has a strong presence on the retail, telecommunication, industrial and consumer goods markets.

Additionally, ACR’s strong market positions in Great Britain, France, Italy and the Benelux, fills in some gaps in Kuehne + Nagel’s Geographic presence. When the transaction closes, Kuehne + Nagel will manage 5.5 million square meters of warehouse space and will have the capability to serve client interests in about 50 counties.

According to Kuehne + Nagel-which has 25,000 employees at 620 locations in 98 countries-a breakdown of the pending deal includes the Schindellegi, Switzerland based company paying a total of ?440 million for Platinum’s share of ACR, as well as the assumption of ?50 million in existing debt. Kuehne + Nagel will pay for the company with a combination of existing cash and the placement of 1.7 million shares (7.1% of Kuehne + Nagel’s share capital).

ACR is a portfolio company in Platinum Equity Capital Partners LP, the firm’s inaugural fund, which closed in 2004 with $700 million of limited partner commitments.

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