By Bill Bregar, Plastics News Staff
Toronto, Ontario -- Canadian private equity firm Onex Corp., which is buying KraussMaffei AG, has experience in plastics machinery -- selling Husky Injection Molding Systems Ltd last year for a big payday and then buying Davis-Standard llc.
David Mansell, an Onex managing director, said the company has no grand strategy to buy machinery companies, although the firm now has a good understanding of the sector. Instead, he said Onex looks for world-class companies run by active managers with a strategic mission that fits with Onex.
He said KraussMaffei unit companies will remain intact.
Onex announced 26 Sept that it plans to buy the world's largest manufacturer of plastics equipment for Euro 568 million ($732 million). That's much less than the Euro 700 million that media reports said the seller, Chicago investment firm Madison Capital Partners, was hoping to get. Several Plastics News sources confirmed the Euro 700 million target price.
Mansell declined to comment on the asking price. Larry Gies, Madison Capital Partners' president and ceo, did not return telephone calls seeking comment.
The announcement ends industry speculation about an imminent deal for Munich-based KraussMaffei group, which generated record order income of Euro 1.1 billion ($1.5 billion) for the fiscal year ended 30 Sept 2011.
Onex said KM's revenues were about Euro 1 billion for the 12 months ended 30 June 2012.
After 31 years of ownership, Husky became a lucrative investment for Onex, which is traded on the Toronto Stock Exchange. Onex received net proceeds of $1.8 billion, providing a gain of about $1.2 billion, a 36 percent rate of return. Onex's portion of the net proceeds from the Husky sale was about $583 million.
But machinery industry sources say KraussMaffei, a broad-based machinery manufacturer that has been private-equity owned for 10 years, is very different to Husky, and will be harder to improve financially for another big payoff down the road.
The KraussMaffei machinery group employs 4,000 around the world building injection moulding machines, extruders and reaction injection moulding machines. Brands include KraussMaffei and Netstal injection presses, KraussMaffei Berstorff extruders and reaction processing machines for polyurethane.
Toronto-based Onex said the transaction should close by 31 March.
Mansell, called KraussMaffei a "global leader in each of its three segments, with a decades-long reputation for technology and quality."
"We look forward to working with Jan Siebert and his management team to further build on the company's market-leading position," Mansell said in prepared comments.
KraussMaffei is the first European-based investment for Onex Partners III, a $4.7 billion fund run by Onex that will inject $340 million into the business. In June, Onex announced it was opening its first European operation, a London office.
Mansell said it makes sense for Onex's first investment into a European-headquartered company to be plastics machinery. "It would have been unusual if our first acquisition would have been new to Onex," he said.
KraussMaffei operates factories in Germany, Switzerland, Slovakia and China.
In a statement KraussMaffei said it had made "successful steps to strengthen the business in its core markets as well as to expand its global presence in growing markets, particularly the BRIC countries [Brazil, Russia, India, China] and Asia."
"We're very pleased to be partnering with Onex given its track record and experience in our industry," said Siebert, KraussMaffei's ceo.
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