CHAMP PE completes lighting take-private

Struggling surfwear manufacturer Billabong is currently trading below A$1 after a A$694 million ($709 million) buyout by TPG Capital fell through earlier this month. The private equity firm originally bid A$841 million for Billabong in February - A$3 per share - but the company founder rejected it. Cleaning and catering contractor Spotless was acquired by Pacific Equity Partners for A$720 million in April despite the best efforts of its chairman.

CHAMP Private Equity, however, has managed to complete two take-privates in the past seven months with minimal fuss, albeit for smaller ticket sizes. Having won approval to buy outdoor advertising company oOh!media in March, last week the firm won full backing from the board and family owners of Gerard Lighting Group for a A$186 million buyout. Both investments came via CHAMP Buyout III Fund, a A$1.47 billion vehicle that closed in November 2010.

Other portfolio companies include shipping services provider Miclyn Express Offshore, wine purveyor Constellation and fencing company AFT Services.
"Historically, we've got involved in situations where we think a major shareholder and the board is open to a potential take-private transaction," John Haddock, CHAMP managing director, tells AVCJ. "Among the five deals Champ III has completed, two are take-private, so I would say it has been an important source of deal flow over the last couple of years."

The origins of the transaction can be traced back to March, when one of CHAMP's affiliates identified Gerard as a potential target and initiated discussions with the board. An agreement was reached in July, with the private equity player offering to pay A$1.05 per share for all outstanding shares. At that time, the price represented a 49% premium to the company's three-month trading average.

Gerard is one of Australia's leading manufacturers and distributors of lighting products, and also maintains a substantial overseas business. Its brands include Pierlite, Sylvania and Crompton.

For the year ending June, Gerard posted revenues of A$389 million and a net profit of A$17.6 million, down 9.7% on prior year due to a fall in demand from residential developments. Despite these headwinds, Simon Gerard, managing director of the company, said in August that investment in new technology, particularly LED lighting, is continuing.

"Lighting in general is undergoing a structural shift to LED and energy efficient lightings. Gerard is very well positioned to utilize its sales and distribution network to capitalize on this change," Haddock adds. "There are a number of areas of growth we will pursue including bolt-on acquisitions in Australasia."

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• Topics
• Australasia
• Buyouts
• Australia
• CHAMP Private Equity