Japanese buyout deal values Grohe at €3.06bn
LIXIL Group and the Development Bank of Japan said yesterday they would buy bathroom-fixtures maker Grohe Group, valuing the German company at ¤3.06bn.
Lixil Group and the Development Bank of Japan are purchasing 87.5% in the company from TPG Capital and a unit of Credit Suisse Group, Grohe said yesterday. The deal is the second-biggest by a Japanese company this year.
Japanese companies are expanding overseas as they target growth outside their home market as the country’s population shrinks.
Lixil Group, which also sells construction materials, bought bathroom-fixture maker American Standard Brands this year, as the group aims to more than double sales revenue at its international unit to ¥1-trillion (R101bn).
“Lixil will gain a brand name with a high-quality image by buying Grohe,” Credit Suisse analyst Masahiro Mochizuki said in Tokyo. “It’ll help boost overseas sales when the domestic outlook is dim, which is in line with their plan to expand outside Japan. There’ll be an opportunity to cut costs as well,” he said.
The companies said they expect- ed the deal to be completed in the first quarter of next year. Grohe will remain independent within Lixil Group, and CEO David Haines has signed a new five-year contract to head the unit.
Last month, Lixil Group agreed to pay $542m for American Standard and has also bought Permasteelisa, which made walls for the Guggenheim Museum and the Sydney Opera House.
Lixil “has an exceptional track record and is currently a leader in both the raw materials industry and in residential fittings”, Mr Haines said. “As a growth-oriented company, Lixil was always a dream candidate for the further implementation of our growth strategy, particularly in growth economies.”
Yesterday’s deal is the biggest acquisition announced by a Japanese company this year after Mitsubishi UFJ Financial Group, Japan’s biggest lender, said in July that it planned to buy Thailand’s Bank of Ayudhya for as much as ¥560bn.
Lixil Group rose 4.9% to ¥2,099 in Tokyo trading yesterday. It has risen 9.5% this year, compared with Japan’s Topix index’s 42% gain.
Private equity firm TPG and Credit Suisse unit DLJ Merchant Banking Partners bought Grohe in 2004 for a reported $1.84bn from BC Partners and helped expand its reach into Asia in 2011 when they bought control of China’s Joyou.
TPG and Credit Suisse had been exploring a dual-track sale and listing process since April, people familiar with the preparations said at the time. Grohe, which is based in Dusseldorf and calls itself Europe’s largest provider of sanitary fittings, had also drawn interest from companies including Swiss competitor Geberit, the people said.
Lixil Group had ¥285bn of longterm borrowings outstanding at the end of March, according to data.
The company is rated a fifth-highest A+ by Japan’s Rating & Investment and had ¥40bn in bonds outstanding, according to data.
Grohe, TPG and DLJ were advised by Acxit Capital Management, Credit Suisse, Goldman Sachs Group, Weil and Clifford Chance. Lixil was advised by BNP Paribas, Moelis & Company, SMBC Nikko and Linklaters.