Carlyle Group Takes German Co. Private –

The Carlyle Group is conducting a public tender offer of a German company-a deal Carlyle views as expensive but necessary to help establish the Washington, D.C. firm as a benign presence in the European business community.

Carlyle in March invested euro 60.4 million in the buyout of Honsel-Werke A.G., which gives the firm a 72% stake in the company. The transaction was negotiated privately with the Honsel family, which controlled the shares. Carlyle has since been attempting to purchase the remaining shares outstanding for euro 117.6 per share. According to Hans Albrecht, a managing director at Carlyle’s Munich office, the firm already has purchased 82% of the outstanding stock.

The Honsel family will retain a 25% stake in the new holding company-Honsel Beteiligungs GmbH & Co. KG.

Commerz Bank A.G. of Germany is providing euro 103 million in debt for the transaction.

Start of Public-to-Private Trend

Dr. Albrecht said the Honsel deal is the first instance of a financial sponsor conducting a public-to-private transaction on the German stock exchange.

Although the transaction was more expensive than Carlyle had hoped for, Dr. Albrecht said press reports had characterized Honsel shareholders as feeling the tender offer was fair. He said the relatively positive press coverage of the event will help Carlyle in negotiating future deals because the firm would be perceived as a friendly investor.

Giving U.S. Firms a Good Name?

Carlyle’s desires for good public relations come at a time when U.S. buyout firms increasingly are doing business in Europe. Some of these firms are trying to battle the perception held by some Europeans that they are predatory foreign capitalists and dismissive of local business culture.

Dr. Albrecht said Carlyle will convert Honsel to a limited liability partnership, which will automatically delist the company from the German exchange.

Honsel makes aluminum die-cast products, such as engine blocks. Its customers include the major European car makers. The Honsel family was approached by Carlyle as a result of Dr. Albrecht’s private contacts. According to Dr. Albrecht, the family did not have the resources to expand Honsel’s business, and were not in agreement with each other about how to run the company.

Carlyle also was encouraged to buy the company by a member of its European advisory board, Eberhard Von Kuenheim, who recently stepped down as chairman of the board at BMW.

Also on Carlyle’s board of advisors is John Major, the former Prime Minister of the United Kingdom.

Carlyle closed its euro 1 billion Carlyle European Capital Partners, L.P. last September (BUYOUTS April 20, 1998, p. 1). The firm’s European effort is headed by Dr. Albrecht in Munich and Jean-Pierre Millet in Paris.

Last August, Carlyle made its first deal from the European fund with the recapitalization of Groupe Genoyer, a French manufacturer of petroleum valves, for $245 million (BUYOUTS Aug. 31, 1998, p. 12).

Since then, Carlyle has made add-on acquisitions for Groupe Genoyer in Italy and the U.S.

Mr. Albrecht said Carlyle’s strategy with Honsel will be similar to that of Groupe Genoyer-the firm will seek to expand the company’s business through acquisitions in other European companies and in the U.S.