CVC Capital Looks to Taking Minority Stake in German Fleet-Services Firm--Update
November 16 2018 - 4:51PM
Dow Jones News
By Eric Sylvers and Ben Dummett
Private-equity firm CVC Capital Partners agreed on Friday to buy
a minority stake in DKV Mobility Services Group, as buyout firms
continue to show a desire to broaden their investment
strategies.
CVC and the private German fleet-services company didn't report
the value of the deal. The Wall Street Journal earlier reported the
pact would value DKV at about EUR2 billion ($2.27 billion),
including debt.
European-based CVC said it will take a 20% stake and let the
current management continue. DKV's family owners will hold 80% of
the company.
DKV, which had EUR7.2 billion of revenue last year, issues cards
that are used by commercial drivers to pay for fuel, toll and other
services in more than 40 European countries without having to carry
cash. It has more than 900 employees, according to its website.
Traditionally, large private-equity firms such as CVC tend to
buy companies outright. They bet on cost-cutting and other measures
to improve the operations over three to five years with the aim of
generating outsize returns from a subsequent sale or initial public
offering of the business.
But the CVC-DKV deal reflects efforts in recent years within the
buyout industry to diversify investment strategies. Amid increased
competition, cash is being deployed to acquire or invest in assets,
such as family-controlled businesses, whose owners previously
hesitated to sell to private equity.
Historically, family-controlled businesses such as DKV have been
reluctant to sell to investment firms on concerns that such a move
would spur job cuts and other belt-tightening measures.
"Family businesses are still very important in Europe and it's
important for them to have access to capital," said Richard Burton,
head of financing and advisory at UniCredit SpA, which with
Commerzbank AG advised the seller.
Royal Bank of Canada advised CVC.
CVC, in recent years, has broadened its approach to use
partnerships as a way of funding investments in companies, working
with the existing management to ensure the operation's continuity.
In June, CVC struck a deal to acquire a majority in Italy's
Recordati SpA from the pharmaceutical company's controlling family
in a deal valued at EUR3.03 billion. In another deal this summer,
CVC joined industrial-gases company Messer Group to acquire the
majority of Linde AG's gases business in North America along with
certain business activities in South America.
Write to Eric Sylvers at eric.sylvers@wsj.com and Ben Dummett at
ben.dummett@wsj.com
(END) Dow Jones Newswires
November 16, 2018 16:36 ET (21:36 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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