Private equity firm Electra‘s sale of Allflex is attracting a lot of interest and around a dozen buyout firms are set to bid for the livestock identification company, Reuters reported Tuesday. Buyout house Electra hired Rothschild earlier this year to explore a sale or refinancing of Allflex, which could fetch around $1 billion.
(Reuters) – Private equity firm Electra’s sale of Allflex is attracting a lot of interest and around a dozen buyout firms are set to bid for the livestock identification company, banking sources said.
Buyout house Electra hired Rothschild earlier this year to explore a sale or refinancing of Allflex, which could fetch around $1 billion [ID: nL6N0ASFX1]
Allflex has attracted plenty of attention from private equity houses hungry for deals following a dearth of merger and acquisition activity in 2012 and tempted by a leader in electronic traceability for animals, in light of the recent scandal of horsemeat mislabelled as beef, banking sources said.
“A lot of private equity houses can see this business growing even faster as traceability is key, now more than ever,” one of the bankers said on Tuesday.
A dozen or so private equity firms have been invited to place bids for the company this week including Astorg Partners, Bain Capital, BC Partners, Blackstone, Carlyle, Charterhouse, Hellman and Friedman, KKR, Ontario Teachers’ Pension Plan, OMERS and PAI Partners, banking sources added.
All potential bidders declined to comment or were not immediately available. Electra was not immediately available.
It is expected that around half the bidders will make it through to the next round of bidding and receive more information on the company at that point.
Electra bought Allflex in 1998 after the European Union tightened food traceability rules in the wake of the Bovine Spongiform Encephalopathy (BSE) or “mad-cow disease” crisis.
It has recapitalised the business twice, in 2005 when it paid itself a $238.6 million dividend and in 2007 when it took $380 million out of the company, Thomson Reuters LPC data shows.
Bankers are working on debt packages to back a buyout but the financing packages are getting more aggressive as appetite increases for the company, bankers said.
Debt packages are around $650-$700 million or 6.5-7 times Allflex’s approximate $100 million earnings before interest, tax, depreciation and amortization (EBITDA) bankers said, a vast increase on the $500 million packages bankers were putting together in January
Allflex has factories in France, Brazil, Poland and China and generated sales of $259.4 million in 2011 compared with $222.1 million in 2010, according to Electra’s website. (Reporting by Claire Ruckin; Editing by Helen Massy-Beresford)