LONDON (Reuters) – Troubled Candover agreed to sell energy research firm Wood Mackenzie to rival Charterhouse for an enterprise value of 553 million pounds ($905 million), in this year’s biggest European purchase by a private equity firm.
Although the sale price is below the 650 million pounds originally mooted by newspapers, the deal announced on Friday provides a welcome cash infusion for Candover’s listed parent, Candover Investments Plc (CDI.L), which will get 36.2 million pounds from the deal.
Candover Investments shares rose 15.2 percent to 309-3/4 pence by 0814 GMT in thin trading. The stock has bounced from a more than 10-year low of 78-1/2p set in late March but remains a fraction of a 2,320p peak set just over a year ago.
Once one of Europe’s biggest private equity houses, Candover has seen a string of its investments plunge in value and it suspended new investments by its 2008 fund. The group, which owns 6.3 percent of Wood Mackenzie, is itself in talks on a takeover of all or part of its equity.
The deal gives Edinburgh-based Wood Mackenzie an enterprise value of about 14.6 times its 2008 earnings before interest, tax, depreciation and amortisation (EBITDA) of 38 million pounds. Candover owns 67 percent of Wood Mackenzie, with staff holding most of the rest.
Charterhouse’s bid topped competing second-round offers from rivals Bain Capital, Hellman & Friedman and Warburg Pincus [WP.UL], a person familiar with the matter said last week. Earlier interest had also come from consultancies and trade rivals.
Candover Investment’s proceeds include 19.6 million pounds in cash, a possible 1.9 million more later and 16.7 million in carried interest payments from the 2001 Fund, which first invested in Wood Mackenzie four years ago.
“Candover’s stabilisation programme continues to make progress,” Candover Chairman Gerry Grimstone said.
“The proceeds from this sale bolster our cash reserves and the crystallisation of the carried interest bodes well for incremental cash flow as and when the 2001 Fund achieves more realisations.”
Candover is also trying to sell 49 percent of German academic publisher Springer Science and Business Media, which it owns alongside Cinven, according to people familiar with the matter.
Low-profile Charterhouse [CHCAP.UL], led by former Bankers Trust managing director Gordon Bonnyman, said in April its latest buyout fund Charterhouse Capital Partners IX had raised 4 billion euros.
The deal marks the largest acquisition in Europe by a private equity group in 2009, according to Thomson Reuters data.
Charterhouse was advised by HSBC (HSBA.L)(0005.HK) and Nomura (8604.T), according to people familiar with the matter. The deal is a boost for the duo who also advised KKR on the biggest buyout of the year globally, the $1.8 billion purchase of Oriental Breweries.
Goldman Sachs (GS.N) advised Candover.
HSBC, Lloyds Banking Group (LLOY.L) and Nomura arranged a loan to back the sale, banking sources told Reuters Loan Pricing Corp this week, replacing an earlier staple financing provided by Lloyds.
By Quentin Webb and Julie Crust
(Editing by David Holmes) ($1=.6113 Pound)