Onex Corp. (OCX), Canada’s largest buyout firm, agreed to buy KraussMaffei AG, the German maker of machinery for processing plastics and rubber owned by Madison Capital Partners, as it increases investments in Europe.
The Toronto-based private-equity firm will pay 568 million euros ($731 million) for KraussMaffei, according to a statement today. The acquisition marks the first European-based investment for the $4.7 billion fund Onex Partners III, and the transaction should close by the end of March, the company said.
Founded in 1984 by Chief Executive Officer Gerald Schwartz, Onex has completed about 360 acquisitions whose total value exceeds $40 billion, according to its website. The German company, which employs about 4,000 people and supplies the automotive, construction and electronics industries, has sales of about 1 billion euros.
The Onex fund will invest $340 million in equity in the deal, of which Onex’s share is about $86 million as a limited partner in the fund. Including this transaction and the acquisition of SGS International Inc. earlier this month, the fund will have invested about 60 percent of its money.
“I look forward to working with my colleagues to find similar investment opportunities as we build our business in Europe,” Tony Morgan, a managing director at Onex in London, said in the statement.
Buyout firms such as Onex typically use loans secured on the targets they acquire to finance half to two-thirds of the purchase price, while using cash from their own funds for the rest. The firms seek to improve performance at the companies they acquire, or expand them, before selling them within about five years.
KraussMaffei was sold to Chicago-based Madison Capital Partners in 2006, according to the German company’s website. The company was formerly known as MPM Mannesmann Plastics Machinery GmbH and has previously been owned by KKR & Co. (KKR) and Siemens AG. (SIE) Madison hired Goldman Sachs Group Inc. (GS) to find a buyer, people familiar with the process said in June.
KraussMaffei Group is unrelated to Krauss-Maffei Wegmann GmbH, the German armored vehicle maker.