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Tue 18 Feb 2020 08:56 AM

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ADIA among firms shortlisted in $17bn battle for Thyssenkrupp unit

Advent International, Cinven and Abu Dhabi Investment Authority (ADIA) one of two groups of potential buyers of Thyssenkrupp's elevator business

ADIA among firms shortlisted in $17bn battle for Thyssenkrupp unit

Labour representatives and some executives were worried Kone’s bid faced a lengthy and unpredictable competition review and could lead to a breakup of the elevator business.

Two groups of private-equity firms are through to the next round in the heated takeover battle for Thyssenkrupp AG’s $17 billion elevator business, a sale which could rank as one of the biggest deals globally this year.

The shortlist of potential buyers consists of a consortium backed by Blackstone Group Inc., Carlyle Group Inc. and Canada Pension Plan Investment Board and a second group of Advent International, Cinven and the Abu Dhabi Investment Authority.

“The objective is to reach an agreement quickly on a majority or full sale,” Thyssenkrupp in a statement.

The decision leaves Finnish rival Kone Oyj, which teamed up with CVC Capital Partners, empty handed despite offering the highest bid.

Labour representatives and some executives were worried Kone’s bid faced a lengthy and unpredictable competition review and could lead to a breakup of the elevator business, people familiar with the matter said earlier this month. Kone’s Class B shares fell as much as 6.9%, the most in two years.

“Kone has likely missed the opportunity to almost double its revenue and service-unit base to become the largest elevator company globally,” said Mustafa Okur, Bloomberg Intelligence industrials analyst.

The announcement of the shortlist on Monday means that private-equity group Brookfield Asset Management Inc. and Temasek Holdings Pte. are also out of the running.

It’s widely expected that the elevator unit could fetch more than 16 billion euros ($17.3 billion) -- making it one of the most closely watched transactions this year. At that price, it would also be the biggest private-equity acquisition in Europe since 2007, when KKR took Alliance Boots Plc private in a deal valued at more than $23 billion including debt, according to data compiled by Bloomberg.

Thyssenkrupp reiterated that an initial public offering of elevator unit remains an option, if no agreement is reached. The shares slid 3.4% as of 4:53 p.m. in Frankfurt.

The company, once a symbol of German industrial prowess, needs to sell its thriving elevator business to plug holes in its balance sheet and pay off a mountain of debt. Chief Executive Officer Martina Merz told shareholders last month that the company is in an “extremely difficult situation” and has “no time to lose.”

Thyssenkrupp aims to sign a deal with a buyer by the end of the month, people with knowledge of the matter have said. Any transaction would add to the $16.2 billion of mergers and acquisitions involving German companies announced this year, according to data compiled by Bloomberg.

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