Goldman and PAI Partners ask Morgan Stanley to sell Xella - sources (updated)
29/06/2016 13:19
(Adds details on valuation)
LONDON/FRANKFURT, June 29 (Reuters) - Private equity group
PAI Partners and Goldman Sachs' investment arm have mandated
Morgan Stanley MS.N and Goldman Sachs GS.N to sell building
materials maker Xella after failing to float it last year,
people familiar with the matter said.
An auction or a second attempt to float the German company
is expected to fetch more than 1.8 billion euros ($2 billion)
and to start in September, they said on Wednesday.
Xella posted revenues of 1.3 billion euros and core earnings
of 243 million in the twelve months to the end of March 2016,
according to its latest financial presentation.
Listed sector peers such as Wienerberger WBSV.VI , Braas
Monier BMSA.DE , Etex BE0941244536.BR or H+H HHDC.CO trade
at roughly 5 times their expected core earnings.
One source familiar with the matter said Xella's core
earnings, or adjusted earnings before interest, taxes,
depreciation, and amortisation (EBITDA), are expected to reach
260 million euros this year and the company may be valued at
more than 7 times that.
Xella this month gave no specific EBITDA forecast and only
said that it expects its efficiency programme to reap fruit
while it sees an upward trend in the construction industry
continuing in its core markets where Germany, the Netherlands
and Poland have been drivers over the last 2-3 years.
In last year's initial public offering (IPO) attempt the
company had targeted an enterprise value of 2.5 billion euros,
sources said at the time. urn:newsml:reuters.com:*:nL5N11S2RM
Xella has since increased its net debt to 744 million euros
as of March 2016 from 568 million a year earlier.
Goldman Sachs, Morgan Stanley declined to comment, while PAI
was not immediately available for comment.
The company will be marketed to other large buyout groups
with an interest in the sector, the sources said, noting that
other building materials makers are unlikely to submit offers.
Building materials brands such as Ytong, Hebel and Silka
account for roughly two thirds of the business of the Duisburg,
Germany-based group, while 20 percent of its sales come from
higher-margin lime and limestone businesses, which account for
almost a third of the group's earnings.
This month Moody's lifted its outlook on Xella to stable
from negative citing the expected improvement in 2016
performance. urn:newsml:reuters.com:*:nMDYc3vHfy
(Reporting by Pamela Barbaglia and Arno Schuetze; Editing by
Harro ten Wolde and Louise Ireland)
((arno.schuetze@thomsonreuters.com; +49.69.7565.1197; Reuters
Messaging: arno.schuetze.reuters.com@reuters.net))
Keywords: XELLA SALE/