Ending months of speculation about potential buyers for the largest electrical distributor in the world, Paris-based Pinault Printemps Redoute, entered exclusive talks to sell its stake in Rexel to a consortium formed by three investment groups.
Pinault Printemps Redoute said Nov. 30 it was in exclusive negotiations with the consortium formed by Clayton, Dubilier & Rice; Eurazeo, a French investment firm; and Merrill Lynch Private Equity for the sale of its full interest in the share capital of Rexel. Pinault Printemps Redoute wants to divest its 73.45-percent stake by year-end to focus on luxury goods and distribution. PPR owns high-fashion brands such as Gucci, Yves Saint Laurent, Sergio Rossi, Boucheron and Bottega Veneta.
The Eurazeo offer is for the 73.45 percent of Rexel shares owned by PPR. Minority shareholders will be offered the same guaranteed price through a mandatory tender, PPR said.
Negotiations are based on an offer price of $51.15 per Rexel share, giving Rexel’s equity an implied market value of $3.45 billion and representing a 7 percent premium to Nov. 29’s closing share price of $47.84.
The deal will be the biggest leveraged buyout in Europe this year, the consortium of investment firms said in a statement. “Rexel is a very high quality, market leading, global distribution business that shares many of the opportunities to grow and enhance operating performance of our most successful investment — many of which have been in the distribution space,” said Joe Rice, chairman of Clayton, Dubilier & Rice.
Patrick Sayer, chief executive officer of Eurazeo, said, “We are very pleased with the opportunity to invest in Rexel, together with Clayton, Dubilier & Rice and Merrill Lynch Global Private Equity. This transaction would be the largest LBO in Europe this year. We are confident in the future of this world leader and the ability of its management to pursue successful development.”
Rexel has 280 locations and 4,400 employees in the United States, and had 2003 annual U.S. sales of $1.9 billion, according to Electrical Wholesaling magazine’s 2004 Top 200 listing. Rexel SA has 1,700 branches and 21,300 employees in 29 countries and approximately $8.2 billion in 2003 annual sales.
The company’s U.S. year-to-date sales through Sept. 30 are up 7.4 percent to approximately $1.5 billion. Its Canadian sales for the same period increased 3.8 percent to $246.6 million.
The transaction is subject to normal regulatory approvals.