GMM Pfaudler to acquire majority stake in the global business of Pfaudler Group

GMM Pfaudler Limited ("GMM" or "Company") today announced the signing of definitive agreements to acquire a majority stake in the global business of its parent, the Pfaudler Group ("Pfaudler") from the private equity firm Deutsche Beteiligungs AG Fund VI ('DBAG'). As per the agreements, GMM (directly and through its subsidiary Mavag AG) and the Patel family will acquire, a 54% and 26% equity stake respectively in the Pfaudler Group. DBAG will continue to retain the balance 20% stake. The consideration for the 54% stake acquired by GMM, which is expected to be around USD 27.4 million, will be funded by the Company through a mix of internal accruals and debt.

Pursuant to the acquisition, GMM shall become the ultimate holding company with the entire business of Pfaudler being consolidated into the Company. The Company will have a consolidated revenue of Rs. 20 bn. and EBITDA of approximately Rs. 2.5 bn.

GMM will become the world leader in corrosion-resistance technologies, systems and services with 12 manufacturing facilities across 8 countries and 4 continents and employing around 1,500 people.

Commenting on the transaction:

Tarak Patel, Managing Director, GMM said, "Over the last 5 years, we have shown an unparalleled track record of growth at GMM and it is now time to take our Company to the next level through this transformational acquisition. Being an integral part of Pfaudler for more than 3 decades, not only do we understand the business very well but have also managed to build a collaborative relationship with the different Pfaudler units around the world. This transaction is unique from the stand point that it combines the strengths of three very different partners - Promoter family, Professional Management and Private Equity which we believe will help extract synergies and create vaiue for all stakeholders. On a personal level and as the third generation of a family business that began in 1963 it is a moment of great pride to see GMM enter the global stage."

Thomas Kehl, CEO, Pfaudler said, "Over the last few years Pfaudler has spent significant capex in modernizing it's manufacturing facilities across the globe. This transaction will bring synergies across multiple levels, the combined business will now be in a position to leverage GMM's highly successful lean-production model and low cost to improve both revenue and profitability. In addition, our order book remains strong on the back of robust demand driven by the Chemical and Pharmaceutical industries. Together with the GMM management and DBAG, who we have worked closely with over the last 5 years we expect to complete a seamless integration and hit the ground running."

Tom Alzin, Managing Director, DBAG said, "The rationale behind our investment in Pfaudler in 2014 was to back a high-quality supplier of corrosion-resistant equipment in a global niche market. The Group's progress over the past 5 years along with the phenomenal performance from GMM validates our investment decision. As a former Board Member of GMM, I can say that we have built a strong relationship with the Patel family and remain committed to support the business through expansion of the product portfolio by add-on acquisitions. Given the synergies of the combined business and the long association between Pfaudler and GMM, we believe that the combined business will be EPS accretive from the start and we will continue to remain invested in the Company."

Subject to the satisfaction of certain closing conditions and regulatory approvals, the transaction is expected to close in November 2020.

Alvarez & Marsal and Trilegal acted as the exclusive financial and legal advisors respectively to GMM Pfaudier.

Shares of GMM PFAUDLER LTD. was last trading in BSE at Rs.5900 as compared to the previous close of Rs. 5950.45. The total number of shares traded during the day was 1611 in over 545 trades.

The stock hit an intraday high of Rs. 5990 and intraday low of 5820. The net turnover during the day was Rs. 9485186.

Source : Equity Bulls

Keywords