* Triton to pay 1 bln euros and meet pension obligations
* GEA says proceeds will fund acquisitions
* Shares up 6.5 pct
(Adds financing, analyst, share price)
By Maria Sheahan
FRANKFURT, April 16 German industrial machinery
and engineering company GEA Group has struck a deal to
sell its heat exchangers division for about 1.3 billion euros
($1.8 billion) to concentrate on its burgeoning food equipment
GEA said it will use proceeds from the sale to private
equity investor Triton for acquisitions to sharpen its focus on
food-related operations, which will now account for more than 70
percent of group revenues.
Triton is paying about 1 billion euros and assuming pension
obligations at the heat exchangers (HX) business, GEA said,
sending the group's shares up 6.5 percent by 1222 GMT.
The deal values the business at the upper end of market
expectations and analysts said that growth prospects in the food
industry painted a bright picture for GEA's future.
"The food-related business units have clearly outgrown the
HX segment in the past few years and this trend looks set to
continue," Hauck & Aufhaeuser analyst Henning Breiter said in a
note to clients.
The company's businesses making food processing machines and
industrial refrigeration equipment were the group's
fastest-growing last year, while revenue at the HX operation
shrank by about 7 percent.
GEA had put the HX business up for sale late last year,
saying it offered limited synergies with its other operations,
which make products such as industrial meat grinders and
automatic feeding systems for the dairy industry.
The deal with Triton values the HX business, which makes
equipment for a wide range of applications from air conditioning
to cooling towers, at between 11 and 12 times annual operating
profit, according to analysts.
HSBC analysts put the book value of the business at about
973 million euros, meaning the book gain would come to as much
as 327 million euros.
GEA said it expects the deal to close by the end of the
Triton's acquisition will be backed with debt financing
totalling about 1.25 billion euros from banks expected to
include Deutsche Bank, Commerzbank, ING
, RBS and UniCredit, banking sources
The financing will comprise a large undrawn component of
around 400 million euros of guarantee facilities and about 70
million euros of revolving credit.
The rest of the financing will comprise between 750 million
euros and 800 million euros of high-yield bonds, with the total
debt financing amounting to about five times the HX business's
annual EBITDA of about 150 million euros.
Frankfurt-based Triton beat out a rival consortium of buyout
group EQT and industrial services group Bilfinger,
adding to the acquisition this month of Alstom's HX
business for 730 million euros.
($1 = 0.7234 Euros)
(Additional reporting by Claire Ruckin and Anneli Palmen;
Editing by Miral Fahmy and David Goodman)