Fittings maker Grohe attracts bid interest from rivals; Grohe, which has a 8% global market share, posted sales of 1.4bn euros, EBITDA 273m euros

Fittings maker Grohe attracts bid interest from rivals – sources

1:10pm EDT

FRANKFURT (Reuters) – German bathroom fixtures maker Grohe GROH.UL has attracted bidding interest from several rivals, which have been asked to submit tentative offers by the end of next week, three people familiar with the process told Reuters.

Grohe’s owners, investor TPG Capital TPG.UL and the private equity arm of Credit Suisse (CSGN.VX: Quote,ProfileResearchStock Buzz), are running a so-called dual track process that may alternatively result in a stock market listing of Europe’s biggest bathroom equipment maker in the autumn.The potential sale to rivals, which could value Grohe at up to 4 billion euros ($5 billion), could become the largest European deal involving private equity investors this year, ahead of BC Partners’ BCPRT.UL acquisition of German publisher Springer Science SPSBM.UL and CVC’s CVC.UL purchase of German energy-metering firm Ista CHCAPI.UL.

Grohe’s Swiss peer Geberit (GEBN.VX: QuoteProfileResearchStock Buzz) as well as Thailand’s Siam Cement SCC.BK are keen to snap up the company, two of the sources said. U.S.-based Fortune Brands (FBHS.N: QuoteProfileResearchStock Buzz) has also expressed interest in Grohe in the past, but has not been in active pursuit lately, the third source said.

Private equity firms buy companies, try to boost their profitability by cutting costs, merging them with rivals or shaking up operations, and then sell them on in the hope of making a return.

While Grohe’s owners have been sounding out buyer interest for the last two years, they earlier this year launched initial public offering (IPO) preparations to try to extract the most value possible from the asset.

Grohe, which has an estimated global market share of about 8 percent, posted sales of 1.4 billion euros and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 273 million euros last year. It has not provided specific 2013 earnings guidance, which is usually used as a starting point to compare the enterprise value of companies.


Grohe’s owners are hoping for a valuation similar to the 14.4 times EBITDA that Geberit trades at, the sources said. Bidders, on the other hand, are likely to offer valuations more in line with the 10.3 times EBITDA that French peer Legrand (LEGD.PA: QuoteProfileResearchStock Buzz) trades at.

“Grohe continues to evaluate all strategic options,” a spokesman for the company said.

TPG and Credit Suisse, as well as Goldman Sachs (GS.N: QuoteProfileResearchStock Buzz), which is working with Credit Suisse to organise the sale, declined to comment. Geberit and Siam Cement were not immediately available for comment, while Fortune also declined to comment.

TPG and Credit Suisse bought Grohe for 1.5 billion euros in 2004 from BC Partners, backed with 1.45 billion in debt, most of which was loaded on to Grohe, leading to criticism of private equity investors in Germany.

The head of the center-left Social Democratic Party at the time dubbed private equity firms “locusts” that sucked the life out of targets before letting them go bust and moving on.

In a move to shift production to low-wage countries, TPG and Credit Suisse began job cuts at Grohe but carried out many fewer than the 3,000 redundancies originally planned. It kept keeping research and development in Germany.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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