Macquarie adds to European LBO tally

Nordic private equity firm Industri Kapital has sold Dyno Nobel, the Norwegian explosives company, to Macquarie, which hopes to float the business in Australia in 2006.

Australia’s Macquarie Bank has led a consortium of investors to acquire commercial explosives firm Dyno Nobel from Industri Kapital and co-owner Ensign Bickford Industries for $1.7 billion (€2.5 billion; $3 billion). A source close to the deal told PEO that Industri Kapital saw a multiple of almost three times on the exit.

The consortium contributed $350 million of equity, of which Macquarie contributed $75 million, with the remainder funded by a combination of senior and subordinated debt provided by BOS International (Australia), National Australian Bank and Royal Bank of Scotland Australia.

[Industri Kapital] implemented the plans we set out to achieve when we acquired Dyno Nobel, including the acquisition of Ensign Bickford and some large manufacturing assets, as well as changing the manufacturing footprint and improving efficiencies.

Kim Wahl, partner, Industri Kapital

Norway’s Dyno Nobel is an explosives manufacturer with 5,800 employees in 36 countries, research and technology facilities on four continents and sales of $1.4 billion per year.

Industri Kapital, the London-headquartered pan-European private equity firm with Nordic roots, acquired Dyno Nobel from the Oslo Stock Exchange in August 2000 for around €250 million, according to Kim Wahl, a partner at the firm. The original transaction was made from the Industri Kapital 1997 and Industri Kapital 2000 funds.

Following the public-to-private, Dyno Nobel made several strategic add-on acquisitions including a 2003 merger with American explosive initiator manufacturer Ensign-Bickford Company and the 2004 acquisition of El Paso’s ammonium nitrate facilities in the Western US coal regions. It also spun off its chemical business in a merger with Neste Chemicals, an industrial adhesives and coatings supplier, in 2000.

Wahl told PEO that Macquarie beat off competition from a small number of trade and financial buyers in a Citigroup-run auction.
 
He said that after five and a half years of ownership, IK had “implemented the plans we set out to achieve when we acquired Dyno Nobel, including the acquisition of Ensign Bickford and some large manufacturing assets, as well as changing the manufacturing footprint and improving efficiencies”. 
 

Kim Wahl, partner, Industri Kapital

Dyno Nobel sales and EBITDA increased by around 100 percent and 170 respectively under Industri Kapital’s ownership, said Wahl. “Having been able to deliver on most of our plans, we felt it was the right time to pass on the baton.”
 
Wahl added that the 1997 and 2000 funds would be “influenced in a very positive manner not only in terms of liquidity but also returns” by the sale.

Macqarie will focus Dyno Nobel on the North American and Australian markets, and is looking at a possible IPO on the Australian Stock Exchange in the first half of 2006, according to a statement by the firm. As part of its preparations for the floatation, Macquarie has agreed to sell most of the European, Middle Eastern, African, Asian and Latin American businesses of Dyno Nobel to Australian chemical and explosives firm Orica for $685 million.

Macquarie’s private equity arm, Macquarie Capital Alliance Group (MCAG), which raised A$1 billion (€620 million; $770 million) in an IPO on the Australian Stock Exchange earlier this year, has had a busy summer in the European buyout market.

In May, MCAG led a consortium of investors in the €1.85 billion purchase of European directories group Yellow Brick Road from 3i and Veronis Suhler Stevenson. The following month, MCAG outbid Apax Partners and Exponent Private Equity to buy BBC Broadcast, the digital media services arm of the BBC, for £166 million. Macquarie Bank co-invested on both deals.