GMM Pfaudler to acquire a majority stake in the global business of Pfaudler Group

Mumbai (Maharashtra) [India] Aug 22 : GMM Pfaudler Limited ("GMM" or "Company") today announced the signing of definitive agreements to acquire a majority stake in the global business of its parent, the Pfaudler Group ("Pfaudler") from the private equity firm Deutsche Beteiligungs AG Fund VI ("DBAG").
As per the agreements, GMM(directly and through its subsidiary Mavag AG) and the Patel family will acquire, a 54 per cent and 26 per cent equity stake respectively in the Pfaudler Group. DBAG will continue to retain the balance 20 per cent stake.
The consideration for the 54 per cent stake acquired by GMM, which is expected to be around USD 27.4 million, will be funded by the Company through a mix of internal accruals and debt.
Pursuant to the acquisition, GMM shall become the ultimate holding company with the entire business of Pfaudler being consolidated into the Company. The Company will have a consolidated revenue of Rs 20 billion and EBITDA of approximately Rs 2.5 billion.
GMM will become the world leader in corrosion-resistance technologies, systems, and services with 12 manufacturing facilities across eight countries and four continents and employing around 1,500 people.
"Over the last five years, we have shown an unparalleled track record of growth at GMM and it is now time to take our Company to the next level through this transformational acquisition. Being an integral part of Pfaudlerfor more than three decades, not only do we understand the business very well but have also managed to build a collaborative relationship with the different Pfaudler units around the world. This transaction is unique from the standpoint that it combines the strengths of three very different partners - Promoter family, Professional Management, and Private Equity which we believe will help extract synergies and create value for all stakeholders. On a personal level and as the third generation of a family business that began in 1963 it is a moment of great pride to see GMM enter the global stage," said Tarak Patel, Managing Director, GMM on the transaction.
"Over the last few years, Pfaudler has spent significant Capex in modernizing it's manufacturing facilities across the globe. This transaction will bring synergies across multiple levels, the combined business will now be in a position to leverage GMM's highly successful lean-production model and low cost to improve both revenue and profitability. In addition, our order book remains strong on the back of robust demand driven by the Chemical and Pharmaceutical industries. Together with the GMM management and DBAG, who we have worked closely with over the last 5 years we expect to complete a seamless integration and hit the ground running," said Thomas Kehl, CEO, Pfaudler.
"The rationale behind our investment in Pfaudler in 2014 was to back a high-quality supplier of corrosion-resistant equipment in a global niche market. The Group's progress over the past five years along with the phenomenal performance from GMM validates our investment decision. As a former Board Member of GMM, I can say that we have built a strong relationship with the Patel family and remain committed to supporting the business through expansion of the product portfolio by add-on acquisitions. Given the synergies of the combined business and the long association between Pfaudler and GMM, we believe that the combined business will be EPS accretive from the start and we will continue to remain invested in the Company," said Tom Alzin, Managing Director, DBAG.
Subject to the satisfaction of certain closing conditions and regulatory approvals, the transaction is expected to close in November 2020.
Alvarez & Marsaland Trilegal acted as the exclusive financial and legal advisors respectively to GMM Pfaudler.
The company will conduct a call at 4.00 PM IST on August 24, 2020, where the senior management will discuss this transaction and answer questions from participants.
To participate in this conference call, please dial the numbers provided below ten minutes ahead of the scheduled start time. The dial-in number for this call is +91 22 6280 1107/+91 22 7115 8008.
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