CCMP Capital Advisors has utilised its expertise in Asian markets to win the €685 million auction for BOC Edwards, a vacuum equipment business previously owned by German engineering group Linde.
The division supplies equipment and services to advanced industries, including semiconductors and flat panel displays. It already has a large manufacturing presence and customer base in Asia, as well as in the US and Europe, but under CCMP’s ownership it plans to expand further into the region, with a particular focus on China.
Both trade buyers and financial sponsors were involved in the auction, which was run by Deutsche Bank. However, CCMP’s experience in Asian markets – the firm was one of the first private equity firms to invest there and manages about $3 billion of funds dedicated to the region – proved to be decisive.
CCMP partner Stephen Welton told PEO that Edwards met his firm’s two key criteria: “It’s a business with global operations, which has particular opportunities for growth in Asia. And it’s a growth business, because it’s linked to the semiconductor industry which is growing at 8-10 percent per year.” He believes Edwards is perfectly positioned to take advantage: “It’s a global market-leader, with good technical strength, a history of innovation and a long-standing blue-chip customer base.”
A major focus of the new owner will be to build on its current presence in Asia. Nigel Hunton, chief executive of Edwards, told PEO: “We’ve been very successful in investing in Asia – not just in terms of hiring people locally, but also in building manufacturing operations.” The firm already has factories in Korea and Japan, and almost 40 percent of its customers are from the region. The next step is to develop the business’s entry strategy for China, where both Hunton and Welton believe there are substantial opportunities.
Lehman Brothers advised CCMP, while Deutsche Bank, Lehman Brothers, Barclays Bank, and Royal Bank of Scotland are providing the debt finance.
In an unusual move, the deal also includes a clause whereby CCMP will pay Linde a further €65 million when it exits its investment in the business. Linde will also retain control of BOC Edwards’ pharmaceutical business, which operated largely independently from the vacuum equipment division.
Edwards was a subsidiary of the UK-based BOC Group, which Linde acquired for €12 billion last year. Linde decided to sell the division as it looks to focus on its global gas operations business.