FRANKFURT (Reuters) - German industrial gas firm Linde (LING.DE) is selling forklift unit Kion to Kohlberg Kravis Roberts KKR.UL (KKR) and Goldman Sachs Capital Partners (GS.N) for 4 billion euros ($5.1 billion), the company said.
Linde shares rose 1.15 percent to 77.08 euros by 1045 GMT on Monday, following the announcement late on Sunday, outpacing a 0.8-percent rise in the DAX .GDAXI blue-chip index.
Linde, which bought British rival BOC for 8.2 billion pounds earlier this year to create the world’s largest industrial gases producer, said the deal was subject to antitrust approval.
“Linde has earned a very good price,” said a Frankfurt-based analyst, adding that the speed with which the deal had been struck was impressive.
“Shedding the forklifts business removes the remaining conglomerate discount for the future Linde Group,” said Landesbank Rheinland-Pfalz, raising its share-price target to 88 euros from 82.
Linde said in a statement the new financial owners would honor all guarantees Linde gave workers for plants in summer 2005.
Management had struck a deal with workers to keep forklift plants in Germany until 2011 in return for longer working hours and cuts of some benefits to boost profitability, abandoning an earlier threat to move production to eastern Europe.
Linde, which doubled its size through the leveraged BOC deal, wanted to sell its forklift business to become a pure-play gases producer.
Analysts have said they expect Linde to use the proceeds to cut its debt, which rose to 13.13 billion euros at the end of September from 2.42 billion at the end of 2005 due to the BOC acquisition.
The deal put Kion’s enterprise value at 4 billion euros, consisting of a net equity value of 3.6 billion euros plus 400 million in net liabilities.
“We are utterly convinced that KKR and Goldman Sachs have the right overall concept for the group,” Linde Chief Executive Wolfgang Reitzle said in a statement.
KKR and Goldman Sachs said they planned an initial public offering for Kion in the medium term.
A spokesman for KKR said that an initial public offering was conceivable from 2010 onwards. He said the growth strategy for the business would involve fresh funds for further acquisitions.
“We will seek to tap the undoubted potential for growth and earnings in the company and to achieve sustainable increases in its value,” Johannes Huth, European head of KKR, and Alexander Dibelius, head of central and eastern European operations for Goldman Sachs, said in a joint statement.
Kion, which says it is market leader in Europe, is an umbrella company for Linde’s three forklift truck and industrial equipment brands, Linde, Still and OM. It has more than 20,000 staff.
In 2005, the division achieved sales of around 3.6 billion euros, Linde said. The sale contract was signed on Sunday.
Additional reporting by Frank Siebelt