CVC Buys Construction Supplier Ahlsell for 1.8 Billion Euros

CVC Capital Partners Ltd., the buyout firm that owns Formula One, agreed to buy Ahlsell AB for 1.8 billion euros ($2.4 billion) to expand in the wholesale supply of tools, machinery and building products.

CVC is buying the Stockholm-based company from Goldman Sachs Group Inc. (GS) and Cinven Ltd., according to a statement today. The deal will be funded with about 9.9 billion Swedish kronor ($1.5 billion) of leveraged loans, according to two people with direct knowledge of the deal.

CVC will contribute about 800 million euros of equity to the company and the senior acquisition debt will represent 4.25 times Ahlsell’s adjusted earnings before interest, tax, depreciation and amortization, said the people, who declined to be identified because the transaction is private.

“We ended up holding on to it for quite a long time,” said Guy Davison, a partner at Cinven, in a phone interview. “CVC know this market quite well. It’s a good business.”

Under CVC’s ownership, Ahlsell made 25 bolt-on acquisitions, expanding its business across the Nordic region and Baltics. It also installed a new warehouse. CVC competed with other private equity firms for the asset, Davison said.

“After six years, you can’t hold on and on and we feel like we’ve done what we wanted to do,” said Davison.

Deutsche Bank AG, Barclays Capital, Roschier, Freshfields, BCG and KPMG advised CVC on the deal, according to the statement. Completion of the deal is subject to competition clearances.

Investor Discounts

A six-year portion of the debt financing includes a 3 billion-kronor term loan A, a 1 billion-kronor acquisition facility, and a revolving credit of 500 million kronor, all of which pay 5 percentage points more than benchmark lending rates, said the person.

A seven-year 625 million-euro term loan B that pays 5.5 percentage points more than the euro interbank offered rate completes the deal, which will be offered to investors at a discount of 98 cents to 99 cents on the euro in the next two days, one of the people said. A bank meeting will be held in London early next week, the people said.

Nordea Bank AB, Barclays Capital, Deutsche Bank, Goldman Sachs, DNB NOR Bank ASA and Danske Bank A/S are arranging and underwriting the deal as bookrunners, the people said. BNP Paribas SA, Commerzbank AG, Lloyds Banking Group Plc, Nykredit Bank A/S, SEB AB and UniCredit SpA joined the deal at signing as non-active bookrunners and mandated lead arrangers, one of the people said.

The term loan B was initially offered as a 5.4 billion kronor tranche and was changed to euros due to demand from investors, said the people. Ed Moore, an external spokesman in London for CVC, declined to comment.

Cinven and Goldman Sachs bought Ahlsell in 2006 for 1.2 billion euros, according to Cinven’s website.

Ahlsell, which distributes heating and plumbing products and other construction equipment in the Nordic region, Russia and Eastern Europe, employs about 4,500 people and reported revenue of 2.3 billion euros in 2011, CVC said in the statement.

To contact the reporter on this story: Patricia Kuo in London at pkuo2@bloomberg.net; Stephen Morris in London at smorris39@bloomberg.net.

To contact the editors responsible for this story: Faris Khan at fkhan33@bloomberg.net

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