Klöckner AVZ
Thomas Ludwig
Sale of Klöckner & Co AVZ to CRH
As an M&A advisor, when you oversee the sale of a company
where the director's company car is a Porsche 911 Carrera
4, you just know that you will be addressing some sensitive
issues somewhere down the line. The critical juncture in this
venture was the establishment of trust between the manage-
ment team and the new owners', observes Thomas Ludwig,
chief executive officer of German Klöckner & Co. `Holland
Corporate Finance's involvement on both sides of the process
proved invaluable!'
The critical juncture in this venture was the establish-
ment of trust between the management team and the
new owners
When Klöckner, a worldwide player in the distribution of met-
als with a turnover of almost 6 billion euros, was taken over
in 2005 by Lindsay Goldberg & Bessemer (LGB), a New York
private equity house, it immediately became apparent they in-
tended to offload all the non-core elements. One of these was
located in Best, a small provincial town in Brabant. Aluminium
Verkoop Zuid (AVZ) is a market leader in the production and
wholesale supply of awnings. As part of Klöckner, AVZ's posi-
tion was almost autonomous. The director, who had once sold
his own company to AVZ, was firmly in the driver's seat. And
not without reason: in the past ten years he had steered the
company through a period of extensive growth with excellent
returns.
Not just a number
`We were looking for a Dutch M&A advisor with a good knowl-
edge of the market and potential buyers, including private equity
firms',saysLudwig.`Notforalargeanonymousinvestmentbank
with a revolving door of consultants. In this instance I felt it im-
portant that the complete process from beginning to end should
be handled by one consultant only. LGB advised us to approach
Holland Corporate Finance.'
The sale of `his' company stirred the true entrepreneur in the
director, who smelt a real opportunity in the air. He made it known
that together with his management team he wanted to perform
a buy-out; at the same time he let it drop that he had traded in
his Porsche. For an Aston Martin. Klöckner indicated, however,
that a strategic buyer would be the best option, which presented
the management team with a tricky problem. `They would revise
their stance just about every one or two days', remembers Lud-
wig.`Thismadeitverydifficultforustoworkwithotherbidders,
and for two to three months there was very little headway.'
At the same time he let it drop that he had traded in
his Porsche for an Aston Martin
Valuable contribution
Whenthefirstoffershitthetable,thebidsofboththemanage-
ment buy-out team and that of the Irish company CRH, owners
of Dutch DIY chains Gamma and Karwei, were almost identical.
Thebuy-outteamwerethefirsttonegotiate,butwhenthese
talksfloundered,somemutualtrusthadtobeestablishedbe-
tween the management and the same CRH. `It was at this point
that Holland Corporate Finance made their most valuable contri-
bution', explains Ludwig. `They were able to convince the man-
agement that after a buy-out, AVZ would have a considerable
level of debt on board, which would leave very little potential for
growth.' And on the emotional side of things (How could I report
to the manager of such a large group who drives a Volvo V70?)
the management needed to be reassured of CRH's intentions.
Holland Corporate Finance, which had previously worked with
CRH, were able to explain that it is part of their philosophy to
let companies which they have bought out continue to work as
independently as possible.
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