Cincinnati-based Milacron won an auction organized by Morgan Stanley. Earlier reports said rival bidders might include private equity firms Cinven Ltd., Warburg Pincus and Kohlberg Kravis Roberts & Co. LP as well as Mold-Masters' longtime rival Husky Injection Molding Systems Ltd. of Bolton, Ontario. Those earlier reports also pitched the likely price at around C$700 million, well below Milacron's winning offer.
3i said it would receive proceeds of C$347 million from the sale of Mold-Masters. (The firm regularly breaks out the numbers for investments from its balance sheet, but does not include the amounts returned to limited partners in its third-party funds.)
The proceeds are 2.1 times its C$166 million investment in Mold-Masters, which it acquired in 2007. In British currency terms the multiple is 2.6 times, and the proceeds also represent a 90% increase on 3i's £115 million ($179.4 million) holding value for the company at the end of the firm's last financial year in March 2012.
However, analyst Christopher Brown of JPMorgan Cazenove Ltd. said a "more relevant" measure would be the "still impressive" 39% uplift from the holding value at Dec. 31, 2012, which he estimated would add a further 6 pence a share to 3i's net asset value. He said a rising net asset value would bode well for a reduction in 3i's net debt and a further return of capital to investors in 2014. It would also make it harder for New York activist investor Edward Bramson -- who recently began trading in 3i's shares through his Sherborne Investors vehicle -- to agitate for change at the firm.
"More generally, this sale will reassure the market about the carrying value of the portfolio," Brown wrote, "and is an important milestone in [3i CEO] Simon Borrows' strategy, making 3i an uphill battle for Edward Bramson if it is his next target."
Based in Georgetown, Ontario, Mold-Masters makes melt delivery and control systems for the plastics industry.
Since 3i's initial investment, the company has expanded more rapidly in Asia, Europe and South America. It has also made a number of add-on acquisitions. Since 2009, the company has expanded its market share and increased sales from C$168 million to C$271 million.
The buyer, Milacron, is a portfolio company of CCMP Capital Advisers LLC, which bought it from Avenue Capital Group last year.
The deal is expected to be completed by April.
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