FRANKFURT/LONDON Private equity group CVC CVC.UL is buying the stake in German energy-metering firm Ista CHCAPI.UL it does not already own in what will be Germany's largest private equity deal in five years.
CVC will buy a 76 percent stake from co-owner Charterhouse, in a deal valuing the company at 3.1 billion euros ($4.1 billion), two people familiar with the transaction said on Thursday.
The deal is the largest private equity deal in Germany since PAI Partners and Goldman Sachs buyout of building construction materials group Xella in 2008, according to ThomsonReuters data.
CVC and Charterhouse CHCAP.UL had been in advanced negotiations over Ista with BC Partners BCPRT.UL but late in the process CVC - which initially did not participate in the auction - trumped the rival private equity group, a third person familiar with the deal said.
For CVC, the full acquisition of Ista is another about-face: CVC sold the metering firm to Charterhouse at the height of the buyout boom in 2007 for 2.4 billion euros, backed with 2.1 billion debt. CVC shortly thereafter bought back 24 percent.
Late last year, Charterhouse and CVC launched a sale of the group and hired Deutsche Bank (DBKGn.DE) and Goldman Sachs (GS.N) to look for bidders.
A large number of financial investors showed interest and BC Partners, Axa Private Equity, Ontario Teachers' Pension Plan and Wendel were invited to submit second-round bids.
CVC, which according to a person close to the investor is planning to hold onto the asset for about five years, is funding the deal with around 1 billion euros in equity and approximately 2 billion euros in debt provided by Deutsche Bank. The debt is expected to be syndicated to other banks and institutional investors at a later stage, banking sources said.
CVC said in a statement sent on Thursday that it expected to close the transaction by mid-year.
Ista, which has energy meters installed in 11 million flats and commercial sites, posted sales of 701 million euros in 2012 and employed 4,600 staff in 26 countries and is not targeting any bolt-on acquisitions, according to a source familiar with the company.
In 2011, Ista posted earnings before interest and taxes of 186 million euros, 2012 figures have not yet been released.
Suitors have described Ista as an attractive asset as it is expected to get a boost from a European Union directive requiring companies charge customers only for energy they actually consume. That is so far the case only in a few European countries such as Britain, Denmark and Germany.
(Reporting by Arno Schuetze and Alexander Hübner in Frankfurt and Claire Ruckin in London; Editing by Elaine Hardcastle)