Private equity firm KKR on Friday outlined plans to bring part of Germany’s famed Mittelstand to Asia and the US as it took a majority stake in WMF, a maker of cutlery, kitchenware and automated coffee machines, valuing the company’s equity at €670m.
In a rare buyout transaction targeting a listed company, the US fund will pay the existing main shareholder, Swiss private equity firm Capvis, for its 52 per cent stake, and extend an offer to remaining shareholders of €47 a share, some 24 per cent above Thursday’s closing price.
The southern German company is famed domestically for its cutlery, but it is the fast-growing coffee machines business catering to hotels and restaurants that is expected to deliver much of its future growth, particularly by boosting market share overseas.
KKR stressed the potential for sales in Asia and the US, playing on Germany’s perceived expertise in manufacturing high-quality machines. It described WMF as “a true industry champion with significant further growth potential”.
After some difficult investments in Europe, KKR scored a notable success last month when it partly exited its biggest buyout, Alliance Boots, in a $6.5bn deal for 45 per cent of the company.
KKR already has five German investments, including Kion, a forklift truckmaker, and ATU, a car parts business, in which it first invested in 2006. KKR subsequently bought BMG, the music rights business, and with Permira owns ProSiebenSat.1, the TV group. Last year KKR bought Versatel, a German telecoms group, in a buyout from a group led by Apax Partners.
Private equity groups and investors have had mixed success in Germany, where a mass of successful family-owned companies are seen as interesting targets but are often reluctant sellers. But the German market has come more into the spotlight as the economy has powered ahead despite the eurozone crisis.
Blackstone, the investment group, this week said it would expand its advisory business in Germany, saying it saw significant potential for deals.
Of WMF’s €980m of sales last year, more than half came from consumer lines and from its 220 retail outlets. A further 29 per cent of sales came from coffee machines for hotels and caterers – the most profitable part of the business.
WMF was founded almost 160 years ago near Stuttgart, one of Germany’s most entrepreneurial regions known as a centre of carmaking.