Boiler merger is drawing closer
Published: 01 July, 2009
DERBY: Baxi, the boilermaker, is close to agreeing a 1.7bn euro merger with De Dietrich Remeha Group, its smaller Dutch rival. The move would allow the Derby-based group to address its mounting debt problem.
The merged group, with 6 400 employees and pro forma 2008 sales of 1.8bn euros, would become Europe’s third-biggest boilermaker, challenging market leaders, Vaillant and Bosch.
BC Partners and Electra Partners, the private equity owners of Baxi, would invest 100m euros in the merged group as part of the deal, leaving them with a stake of slightly less than half.
Talks are expected to be finalized this summer, although the deal would still need the approval of Baxi’s lenders. If it is blocked, the company could face difficulty in repaying £445m of debt maturing between now and 2014. About £45m of Baxi debt matures this year.
Baxi, owner of the Potterton brand in the UK, Ideal Standard in France and BaxiRoca in Spain, was hit by the housing crisis, which lowered sales, forcing its private equity owners to inject £40m more equity to reset its banking covenants in 2007.
The European boiler market is claimed to be shrinking 5% to 10% a year, as fewer houses are built and people repair rather than replace faulty boilers.
Baxi rebounded last year, increasing operating profits by almost a third to £89.9m after it restructured its French business and opened a cheaper Turkish plant.
BC Partners bought Baxi from Electra and Candover for about £660m in 2004, leaving Electra with a small stake. BC Partners later returned some of its stake to its own investors after selling the Aqualisa showers division.