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Monday 15th of October 2007
October 11, 2007

3i Buy From UBS In GGP Acquisition

by Stewart Douglas

Story link: 3i Buy From UBS In GGP Acquisition

The 3i Group has today announced that it has secured the purchase of Global Garden Products, an Italian manufacturer of lawnmowers in a deal thought to be worth around $1 billion in spite of market volatility which had at one stage jeopardized the success of the transaction.

The 3i Group, the second largest private equity company in Europe, has been making waves in the investment markets with several notable acquisitions in recent weeks underlining its position as a significant heavyweight in the industry despite running in to difficulties in raising affordable finance as a result of the credit crunch environment.

Due to the nature of acquisition investing, predators depend largely on funding to make acquisitions at 66% of their face value, which has led to significant problems in the wake of increased interest rates and a tendency for lenders to shy away from risky credit markets.

The latest target company is currently held by new RBS bank ABN Amro in its holdings and capital division, which it bought from UBS for just over half the current sale price four years ago.

At present, GGP is one of Italy’s largest manufacturers of garden and home products, and has a substantial asset base with attractive long term prospective yield, making it the ideal commodity for investment banks to trade.

Its revenue figures for the last financial year amounted to 555 million euros, with a derivative profit of 85 million euros prior to tax.  Some market analysts believe the sale of the company may be at a lower rate than some would have paid based on traditional revenue multiples, although it is likely that the proactive drive to find a buyer would have reduced the price somewhat.

The 3i Group has completed the transaction with the help and advice of Morgan Stanley, who were brought in to ensure the changeover went through without any difficulties.

 

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