Cinven Lines up GBP322 Million Dynacast MBO

Coats Viyella announced in mid-February that it had exchanged contracts to sell Dynacast, its global precision engineering division, to a GBP322 million (euro 469 million) MBO backed by Cinven.

Warwickshire-based Dynacast, which manufactures plastic and metal components at 37 plants in 19 countries, is the only truly global operator in the precision diecasting market, where it is also the technological leader. Dynacast cooperates closely with its blue chip client base during the design phase of complex diecast components; its products include the Gillette MACH 3 triple-blade razor handle, the chassis for Motorola’s personal security radios and casting for Black & Decker power tools.

The company’s plastics division is a leading manufacturer of small and medium-sized precision components, primarily for the computer and telecommunications sectors. Historically concentrated in the US, the Dynacast plastics division has started to expand internationally and now also operates plants in Wales, Canada and Mexico.

The diecasting division accounted for 60% of Dynacast’s GBP300 million sales in 1997, and the diecasting and plastics businesses together generated operating profits of more than GBP34 million.

Dynacast’s incumbent management team will have a minority stake in the business following the buyout. Cinven, which has underwritten the entire funding package for the deal and will subsequently refinance the debt component, stated that it will “be able to provide the capital necessary for Dynacast to grow both organically and by acquisition”.

The deal is Cinven’s first UK buyout since its GBP860 million acquisition of IPC Magazines in early 1998, a transaction that was followed in the summer by the GBP1 billion Kappa Packaging acquisition in the Netherlands, which Cinven backed in conjunction with CVC Capital Partners.