Canadian private equity firm Onex, which is buying KraussMaffei, has experience in plastics machinery - selling Husky Injection Moulding Systems last year for a big payday and then buying Davis-Standard.
David Mansell, an Onex managing director, said the company has no grand strategy to buy machinery companies, although the firm now has a good understanding of the sector. Instead, he said Onex looks for world-class companies run by active managers with a strategic mission that fits with Onex.
He said KraussMaffei unit companies will remain intact.
Onex announced 26 September that it plans to buy the world's largest manufacturer of plastics equipment for €568m. That's much less than the €700m that media reports said the seller,
Mansell declined to comment on the asking price. Larry Gies, Madison Capital Partners' president and CEO, did not return telephone calls seeking comment.
The announcement ends industry speculation about an imminent deal for Munich-based KraussMaffei group, which generated record order income of €1.1bn for the fiscal year ended 30 September 2011.
Onex said KM's revenues were about €1bn for the 12 months ended 30 June 2012.
After 3½ years of ownership, Husky became a lucrative investment for Onex, which is traded on the Toronto Stock Exchange. Onex received net proceeds of $1.8bn (€1.4bn), providing a gain of about $1.2bn (€1bn), a 36% rate of return. Onex's portion of the net proceeds from the Husky sale was about $583m (€453m).
But machinery industry sources say KraussMaffei, a broad-based machinery manufacturer that has been private-equity owned for 10 years, is much different than Husky, and will be harder to improve financially for another big payoff down the road.
The KraussMaffei machinery group employs 4,000 around the world building injection moulding machines, extruders and reaction injection moulding machines. Brands include KraussMaffei and Netstal injection moulding machines, KraussMaffei Berstorff extruders and RIM machines for polyurethane.
Toronto-based Onex said the transaction should close by 31 March.
Mansell, called KraussMaffei a “global leader in each of its three segments, with a decades-long reputation for technology and quality”.
“We look forward to working with Jan Siebert and his management team to further build on the company's market-leading position,” Mansell said in prepared comments.
KraussMaffei is the first European-based investment for Onex Partners III, a $4.7bn (€3.6bn) fund run by Onex that will inject $340m (€264m) into the business. In June, Onex announced it was opening its first European operation, a
Mansell said it makes sense for Onex's first investment into a European-headquartered company to be plastics machinery. “It would have been unusual if our first acquisition would have been new to Onex,” he said.
KraussMaffei operates factories in
In a statement KraussMaffei said it had made “successful steps to strengthen the business in its core markets as well as to expand its global presence in growing markets, particularly the Bric countries [
“We're very pleased to be partnering with Onex given its track record and experience in our industry,” said Siebert, KraussMaffei's CEO.
Siebert noted that Madison Capital supported the company through the global economic crisis in 2008 and 2009.
“I would like to thank Madison Capital for a reliable and trustful partnership over the last six years,” he said.
Industry sources told Plastics News that three private equity companies were involved in the final stages, two from North America and one from
What's in store?
Now that the announcement has been made, industry attention shifts to the future. The major news will cause a buzz at an upcoming trade show in
One machinery source spelled it out: “What is really going on with this group? To continue with the current strategy, or are they really making a move in some other directions?”
Some of the obvious questions: Would Onex sell any part of the group, for example, Netstal, the Swiss injection press business focusing on thin-wall packaging and PET preforms? Or will Onex merge the Berstorff extrusion operations in with Davis-Standard?
The answer is no, Mansell told Plastics News.
“We don't have any plans to break up KM,” he said.
Private equity companies are typically closemouthed. But Onex is a different animal: a private equity company that is publicly traded, so some financial information about KraussMaffei will be available.
For now, Mansell declined to comment on an industry source's claim that the €568m purchase price is six-times KM's earnings before interest, taxes, depreciation and amortization.
Onex has a track record in plastics machinery, by owning Husky, a major maker of injection moulding machines, hot runners and robots.