Reuters – RLPC-Schenck Sale Stalls

The sale of measuring and materials handling equipment maker Schenck Process has stalled after owner IK Investment Partners deemed two offers for the business too low, banking sources said on Tuesday. Two remaining bidders Bain Capital and Rhone Capital submitted offers for Schenck last week but they pulled out of the running after those were rejected, the banking sources said. That brought the sales process – run by investment bank Morgan Stanley – to a halt.

(Reuters) – The sale of measuring and materials handling equipment maker Schenck Process has stalled after owner IK Investment Partners deemed two offers for the business too low, banking sources said on Tuesday.

 

Two remaining bidders Bain Capital and Rhone Capital submitted offers for Schenck last week but they pulled out of the running after those were rejected, the banking sources said. That brought the sales process – run by investment bank Morgan Stanley – to a halt.

 

IK Investment – like the bidders, a private equity group with a wide range of investment interests – put Schenck up for sale earlier this year and expected to fetch around 700-800 million euros ($864.60-$988.12 million).

 

Four bidders were originally chosen to submit second-round offers for the company including Bain and Rhone. Pamplona Capital Management dropped out of the process before second round offers were submitted [ID: nL6E8J7BOZ]. There had also been trade interest from one Asian company.

 

Bain and Rhone declined to comment. IK Investment was not immediately available to comment.

 

Schenck was acquired by IK Investment from private equity investor HgCapital in 2007 for around 450 million euros. IK Investment is in fundraising mode and one banker said that as the group could not double its money on Schenck they would rather cancel the sale.

 

IK Investment has also backed off a disposal of German outdoor sport surface maker Sport Group and mirror glass manufacturer Flabeg after failing to achieve the right price tag due to concerns from potential buyers over company performance and outlook. That reflects how difficult the buyout market has become due to the euro zone debt crisis [ID: nRLP58666a]

 

Bain’s and Rhone’s bids for Schenck, whose machines aid businesses ranging from power generation to plastics or building materials manufacturing, were unfinanced but bankers had been working on debt packages to back the deal if it went to a private equity buyer.

 

Some bankers said the amount banks were willing to lend on Schenck could have suppressed the value of bids submitted as buyout houses were not prepared to write big equity cheques.

 

Debt packages were likely to be around 400 million euros or around 5 times the company’s approximate 80 million euros of earnings before interest, tax, depreciation and amortisation (EBITDA).

 

Since acquiring Schenck, IK Investment has expanded the business with three acquisitions and the company now has over 3,000 employees worldwide and generates annual sales of more than 560 million euros. ($1 = 0.8096 euros) (Reporting by Claire Ruckin and Arno Schuetze; additional reporting by Philipp Halstrick in Frankfurt; editing by Patrick Graham)