German engineering and services group Bilfinger has announced the sale of its building and facility business to Swedish private equity firm EQT for around €1.2 bn.
The transaction, which represents a nearly 15% discount to the entreprise value of €1.4 bn, follows 'an intensive review of several purchase bids' including offers from French facilities management firm Engie, JLL and Triton Partners.
The sale, which also includes the GVA property services business, represents an EBITA multiple of 11 times the full year estimate for 2016. It is aimed at allowing Bilfinger to focus on the grouwth of its core industrial services.
'The sale of the segment generates the greatest value for Bilfinger and opens up new perspectives. With additional liquidity, we will expand our position as market leader for industrial services in the process industry through targeted acquisitions and investments in the future. In this regard, we are focusing on our technology and service competences, which are greatly appreciated by our customers,' said Chief Financial Officer Axel Salzmann. 'At the same time, building and facility gets a growth-oriented investor with proven expertise in the services sector.'
The business produces annual revenues of about €2.5 bn.
EQT owns around 70 companies in a variety of industries including automotive such as Daimler or facility services groups such as E.ON and engineering such as Siemens, with 140,000 employees and revenues of €17 bn in total.
EQT has already been active in facility management, having acquired the ISS business in the early 2000's which it subsequently transformed into one of the world’s largest facility managers. The business went public in 2014.
Under the agreement, some €300 mln of the amount will be received when EQT re-sells the company. Bilfinger and EQT have agreed on a vendor claim agreement for €100 mln with annual interest of 10% upon maturity. Also, a further portion of the purchase price in the amount of €200 mln will be transformed into an instrument similar to an earn-out, entitling Bilfinger to 49% of the resale proceeds from EQT.
This will allow Bilfinger to continue to participate in a proportionate amount in the development of the sold divisions, the company said, adding that it expects to book a capital gain of €500 mln from the sale.
Bilfinger said it will invest a substantial share of the proceeds from the sale in the expansion of the area of industrial services, taking an active role in the ongoing market consolidation.
'Bilfinger’s core business is industrial services – and Bilfinger will fully focus on this area in the future,' the company added.
