September 14, 2010 / 2:10 PM / 8 years ago

Banks mull $2 billion sale, IPO of UK's Edwards: sources

LONDON (Reuters) - The owners of British engineering firm Edwards, whose vacuum technology is used by the world’s biggest chipmakers, have hired a trio of investment banks to explore a $2 billion-plus sale or flotation.

News of a potential deal comes as private equity firms explore how to realize returns from a slew of big European companies they own, including another high-technology firm, Interxion, which operates 28 data centers across Europe.

People familiar with the matter said Edwards’ owners CCMP Capital and Unitas Capital, both former buyout arms of JPMorgan, have hired Morgan Stanley (MS.N), Goldman Sachs (GS.N) and Bank of America Merrill Lynch (BAC.N) to advise on strategic options for Edwards.

Those options are likely to include a sale to a technology company or rival buyout firm, or an initial public offering (IPO). The owners value Edwards at about 1.5 billion pounds ($2.3 billion), some of the people said.

Edwards competes in some areas with Applied Materials Inc (AMAT.O), the world’s top supplier of semiconductor manufacturing equipment. Other competitors include Japan’s Ebara Corp (6361.T) and the Leybold Vacuum unit of Switzerland’s OC Oerlikon (OERL.S).

Based in Crawley, about 30 miles south of London, Edwards says its technology is used by clients including all 10 of the world’s biggest semiconductor makers, such as Advanced Micro Devices Inc AMD.N and Korea’s Hynix Semiconductor Inc (000660.KS).

Bank of America, CCMP, Edwards, Goldman Sachs and Morgan Stanley declined to comment. Unitas was not immediately available for comment.

Any sale could interest large private equity firms with technology expertise, such as U.S. giants KKR and Co (KKR.N) KKR.UL, Bain Capital, The Carlyle Group CYL.UL and Britain’s Permira PERM.UL, one of the people familiar with the matter said.

A listing may be tougher because London has only hosted a few debuts this year and some have suffered badly: shares in electronic-whiteboard maker Promethean World PRWP.L have fallen almost 40 percent since its IPO.


Linde AG (LING.DE), the German producer of industrial gases, bought Britain’s BOC Group Plc in 2006 and sold the vacuum unit, then named BOC Edwards, a year later. That buyout gave Edwards an enterprise value of $984 million, and was backed by $715 million of loans, Thomson Reuters data shows.

Since taking charge, CCMP and Unitas have shed peripheral businesses, moved into solar power, and begun shifting manufacturing to South Korea and the Czech Republic.

The business suffered a big hit in sales and margins last year as the financial crisis hammered the semiconductor sector. It recorded a 27 percent drop in revenues and a 70 percent plunge in earnings before interest, tax, depreciation and amortization (EBITDA).

Edwards predicts good growth for the coming year, however, driven by demand from emerging markets and for new products, and by reinvestment in semiconductors.

In the second quarter it made $52 million in EBITDA, as sales nearly doubled to $242 million, one of the people said. That means a $2.3 billion price tag equates to about 11 times annualized EBITDA.

In June, Edwards named Matthew Taylor and David Smith, who had worked together in senior management roles at Jaguar Land Rover and Ford Europe, as chief executive and chief financial officer respectively.

    In August Sky News reported Edwards had invited banks to pitch for roles.


    Elsewhere in the technology sector, people familiar with the matter said New York-based Baker Capital, which specializes in communications industry investing, has hired Morgan Stanley to explore a sale of Interxion, the Amsterdam-based data-center operator.

    The potential sale comes on top of preparations for a U.S. IPO: Interxion filed a draft registration with the Securities and Exchange Commission (SEC) in May.

    Interxion’s listed peers include Britain’s Telecity Group Plc TCY.L and Equinix Inc (EQIX.O) of the U.S. It could entice trade rivals and private equity bidders such as Advent International, Apax and Bridgepoint Capital BRDG.UL, these people said.

    However, some of the people cautioned Baker sought a high price — equivalent to more than 10 times the business’s EBITDA — which could deter bidders. That could spell a price tag of roughly 780 million euros or more, based on Interxion’s second-quarter adjusted EBITDA of 19.6 million euros ($25.23 million).

    Interxion declined to comment. Baker Capital founder John Baker did not respond to a request for comment.

    (Additional reporting by Alasdair Reilly; Editing by Sharon Lindores)

    ($1=.6499 Pound)

    $1=.7770 Euro

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