FRANKFURT, Sept 24 Europe's biggest bathroom
equipment maker, Grohe, may launch an initial public
offering (IPO) as early as Thursday if its private equity owners
fail to agree an approximate $4 billion sale by then, two people
familiar with the matter said.
TPG Capital and the private equity arm of Credit
Suisse are divesting Grohe in a so-called dual track
process, which includes the options of floating it on the stock
exchange or selling it to a peer.
Of the suitors, Japan's Lixil has emerged as the
leading bidder with an offer of roughly 3 billion euros ($4
billion), the sources said.
"It's a game of poker now," one of the sources said. "Both
options are on the table and they will remain on the table even
if the intention to float is published later this week."
A stock market listing usually takes place about four weeks
after the publication of the intention to float - time that will
likely be used to continue M&A negotiations, the sources said.
Rallying stock markets mean Grohe would likely be able to
reap a high IPO valuation. However, as TPG and Credit Suisse
would only float a stake in Grohe, they would have no certainty
of being able to sell further shares at the same price at a
"Lixil can afford to bid just below the possible IPO
valuation, but it cannot be too far off," another source said.
One of the IPO organisers has signalled the group could be
valued at 3.2-3.5 billion euros in a flotation, sources have
said in the past.
The sellers had originally hoped for a valuation of up to 4
billion euros in equity and debt. That would have been in line
with the valuation of Swiss peer Geberit, which trades
at 14 times earnings before interest, taxes, depreciation and
U.S.-based Fortune Brands has dropped out of the
auction, while interest from Switzerland's Geberit and Brazil's
Duratex has also cooled, the sources said.
TPG and Credit Suisse bought Grohe for 1.5 billion euros in
2004 from BC Partners, a transaction that sparked criticism of
private equity investors in Germany.
Grohe and its owners declined to comment.
Lixil said it did not rule out an acquisition, but that
nothing had been decided. Geberit and Duratex were not
immediately available for comment.