FRANKFURT Feb 21 German industrial machinery
and process engineering group GEA will shortly narrow
the list of contenders for its heat exchangers division to about
three bidders, possibly including the same groups eyeing rival
Alstom's heat exchanger unit, two people familiar with
both deals said.
Suitors for GEA's unit including KKR, EQT, Bain,
Apollo, Onex and Triton are planning to hand in
confirmatory bids of about 1.2 billion euros ($1.5 billion) - or
seven times operating earnings - by a March 7 deadline, the
Those picked for the last round will then be asked to submit
final offers by the end of April, they added.
The Heat Exchangers division, GEA's second largest business
by revenue, makes equipment for a wide range of applications
from air conditioning to cooling towers.
But GEA last year described the business as non-core and
having limited synergies with its five other divisions - Food
Solutions, Farm Technologies, Mechanical Equipment, Process
Engineering and Refrigeration Technologies.
The potential buyers of the unit are mainly interested in
the air conditioning and industrial cooling applications, but
less so in the power plant-related sub-unit.
Therefore, some have already engaged in conversations over a
subsequent sale of that business to Paharpur Cooling Towers, the
sources said. The India-based group had shown interest in a
similar unit that U.S. peer SPX unsuccessfully tried to
sell in 2012.
Some of the same buyout groups are also eyeing an
acquisition of the heat exchanger unit of French turbine and
train maker Alstom, although none are planning to combine the
Final bids for that business - which comprises the Air
Preheaters unit, making products used by boiler companies and
utilities, as well as the Gas-Gas Heater unit that makes devices
salvaging heat from the flue gas from power plants before it
exits through the stack - are due on March 24.
Private equity firms such as Bain, CVC, Rhone,
Triton, Onex and Astorg, among others, are likely to hand in
bids valuing the firm at 550-600 million euros, two people
familiar with the transaction said.
Bankers are preparing debt packages of about 450 million
euros or 6 times its 75 million euros in earnings before
interest, taxes, depreciation and amortization, one of the
Alstom, which makes high-speed TGV trains, announced
sweeping job cuts in November and said it would sell up to 2
billion euros of assets to raise cash after a tough first half
of the year.
A GEA spokesman said that the group expected to clinch a
deal on its heat exchangers unit this summer.
An Alstom spokeswoman said the group intended to dispose of
non-core assets, declining to comment on specific transactions.
Bain, KKR, EQT, CVC, Astorg and Triton declined to comment,
while Onex, Apollo, Rhone and Paharpur Cooling Towers were not
immediately available for comment.