Biggest British Private Equity Deal Sealed

marketwatch KEY DEALS Biggest British private equity deal sealed The £11.1bn takeover of Alliance advisers and joint corporate brokers. Citigroup £8bn and Heidelberg said it would be taking on I Boots represents not only the latest in a also acted as financial adviser. around £1.5bn of Hanson debt. string of megabids for FTSE 100 companies – Pessina, the Italian who was the original Heidelberg was already involved in the UK a dozen blue chip London stocks have now architect of last year’s merger between Boots market through its Castle Cement subsidiary, been taken out over the last two years – but and Alliance UniChem, said the business and the deal makes Heidelberg internationally also the single biggest private equity-financed needed to be taken off the stockmarket to the number one in aggregates, the second bid for a British company. accelerate development into new markets for a largest producer of ready-mixed concrete, and The complex bid by US private equity giant pharmacy-led healthcare and beauty group. the fourth largest producer of cement. Kohlberg Kravis Roberts in league with Steffano “The markets we serve are changing The deal follows the recent US merger Pessina, Alliance Boots’ largest shareholder dynamically,” Pessina said. between Vulcan Materials and Florida Rock and and its Deputy Chairman, was landed only after Alliance Boots was advised by Goldman other recent acquisitions in the UK market. seeing off a last-minute counter-offensive by Sachs as lead financial adviser, with Credit Cemex of Mexico, which recently acquired funds run by London private equity firm Terra Suisse and UBS acting as corporate brokers. Rinker of Australia, had bought RMC; Firma, acting with the Wellcome Trust. Greenhill acted as independent financial Lafarge of France acquired Blue Circle; and The Terra Firma counter-offer was finally adviser to Alliance Boots’ independent directors. Aggregate Industries fell to a takeover by seen off after KKR and Pessina raised their Holcom of Switzerland. offer to a knockout 1130p and a series of It was the end of the road for another Heidelberg Chief Financial Officer Lorenz dawn raids on the stockmarket and investor I FTSE 100 giant, with the remnant of the Naeger said the deal was initially financed pledges which saw it take control of 29% of great Hanson trading empire coming amid a through bank debt via the Royal Bank of Alliance Boots shares. flurry of deals aimed at winning global Scotland and Deutsche Bank, whose offices in The heavily debt-financed takeover – around leadership in international aggregates and London and Frankfurt acted as financial £8bn has been borrowed – sees KKR and building materials. advisers to the deal. Pessina control around 30% of the new The £9.5bn takeover of Hanson by Naeger said the deal would be refinanced by company’s equity each for an investment of Germany’s HeidelbergCement was a ?500m placing of shares underwritten by around £1bn apiece. Together they share recommended by the British company’s board. the group’s major shareholder Adolf Merckle, 100% of the voting rights. The remaining 40% It marks the end for Hanson, the quoted and the sale of ?2bn of hybrid bonds which he of the equity is being distributed among aggregates group which is the last vestige of said would carry an equity credit of 50%. minority co-investors including the banking the empire constructed by the late Further funding would be raised through syndicate putting up cash to provide the buccaneering British businessman Lord disposals – Heidelberg has already earmarked bridge equity. Hanson. His powerful industrial conglomerate the ?1.4bn sale of its French building The equity syndication and lending was once spanned industries ranging from materials supplier Vicat. Naeger added: “We underwritten by Barclays Bank, the BAS Capital chemicals to electricity and tobacco, but which will go to the bond market to refinance the Funding Corporation arm of the Bank of was broken up in the mid-1990s. balance, the remaining debt.” America, Citigroup, Deutsche Bank, JPMorgan The offer of 1100p a share for Hanson was Hanson was advised by Rothschild Ventures, Royal Bank of Scotland and UniCredit around a 30% premium to where Hanson on the deal with Hoare Govett acting as through Bayerische Hypo- und Vereinsbank. shares had been trading prior to news of corporate broker. Acting on the deal for KKR and Pessina were Heidelberg’s interest, and valued Hanson at UniCredit as lead adviser and JPMorgan around 12 times 2006 EBITDA earnings. Robert Lea is City Correspondent of Cazenove and Merrill Lynch acting as co-lead The offer valued Hanson equity at around The London Evening Standard. EQUITIES TRANCHE PRICING ISSUER ISSUER AMOUNT TYPE NO OF SHARES OFFER EXCHANGE BOOKRUNNER DATE NATIONALITY PRICE Cineworld Group plc $240m IPO 61,381,075 $3.41 27/04/2007 London UK JPMorgan, Lehman Brothers Wellstream Holdings plc $465m IPO 67,037,500 $6.31 25/04/2007 London UK Credit Suisse IPO=initial public offering All data provided by Dealogic. www.dealogic.com 08 THE TREASURER JUNE 2007.

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