Deals

KKR sells Omnetica, bids for recycler

Following the sale of IT services provider Omnetica to UK trade buyer Kingston comes news of KKR’s recommended €260m takeover bid for German recycling company Duales System.

-

Global buyout house Kohlberg Kravis Roberts (KKR) has sold its interest in UK-based IT services provider Omnetica to UK telecoms provider Kingston Communications for £169 million (€245 million; $327 million).

 

KKR elected to receive its consideration in the form of cash and shares, taking a 25 percent stake in Kingston going forward. The £169 million purchase price comprised £99 million in cash plus the issue of £70 million of new shares in Kingston.

 

KKR acquired Omnetica as part of a portfolio of seven companies from German industrial conglomerate Siemens in July 2002. KKR paid €1.7 billion for the portfolio, acquired through a holding company, Demag Holding, in which Siemens retained a 19 percent stake.

 

Of the seven companies acquired by Demag, Omnetica is the third to be sold, following the dispositions in July this year of hydraulic equipment manufacturer Stabilus to Montagu Private Equity and the sale of Swiss electricity metering firm Landis & Gyr to Australian-based Bayard Energy.

 

The transaction was led for KKR by London-based executives Johannes Huth, who will become a non-executive director of Kingston, and Oliver Haarmann. Huth was recently appointed head of KKR’s European operation following the return of predecessor Ned Gilhuly to the firm’s Californian office.

 

In separate news, KKR has launched a €260 million recommended takeover bid for Duales System Deutschland (DSD), a German non-profit recycling company.

 

DSD collects and recycles used packaging in Germany. The company was recently ordered by Germany’s competition regulator to sell at least 75 percent of the company to outsiders to end its monopoly in the German market.

 

DSD is a non-profit making, non-listed company, with around 550 corporate shareholders, including retail company Metro and consumer chemicals giant Henkel. The deal requires 95 percent shareholder approval before the closing date of December 23.

 

Commenting on the transaction, KKR’s Reinhard Gorenflos told the Financial Times: “We like complex transactions which are atypical from normal investment perspectives.” Gorenflos said that DSD would look to expand its product lines, which had previously been forbidden and develop the business internationally.