|July 24, 2007 Barcelona - The private equity firm The Carlyle Group (Carlyle) has agreed today the acquisition of Applus (the Company) from its shareholders Agbar, Unión Fenosa and Caja Madrid for an enterprise value of 1,480 million. With headquarters in Barcelona, the Company is the leader in inspection, certification, testing and technological services in Spain.
Fueled by strong organic growth and several acquisitions over the last years, the Company has significantly diversified its business mix and geographic footprint. As of today, Applus is present in more than 30 countries worldwide.
Pedro de Esteban, Carlyle Managing Director Europe, was thrilled with the acquisition of Applus, one of the most important companies in the European certification sector and the market leader in Auto Vehicle Inspection in Spain and worldwide. As for the future of the Company, De Esteban stated that the goal is to consolidate it as a platform for sectoral and global growth, keeping the headquarters in Barcelona and relying on the current management team, a group of extraordinary professionals that have our trust and support.
On 11th June 2007, Carlyle reached a partnership agreement with Caixa Catalunya, under which the latter will take a 25% equity stake in Applus. Caixa Catalunya will lead a group of well-known local institutional investors that have expressed their interest in the transaction and with whom it is currently in advanced negotiations. Among them are Caixa Manresa, Caixa Terrassa, Caixa Sabadell, Caixa Tarragona, RACC, and Caixa Girona.
Joaquim Coello, CEO of Applus, explained that Carlyles investment is an endorsement of the management teams business plan and a gesture of support to the companys employees. It constitutes an opportunity to initiate a new stage that will enable Applus to make an important leap forward in our growth and leadership ambitions.
With regards to the buyers plan, Alex Wagenberg, Managing Director at Carlyle, stated that the support of Carlyle and a selected group of financial institutions will allow the Company to undertake future investments that will consolidate Applus as a market leader in the segment, just as we are doing with Orizonia.
Applus is currently in an excellent position to grow in each and every one of the sectors in which it operates. Particularly important given their growth prospects are the Vehicle Inspection Division in the USA and the Non-Destructive Testing division, that hopes to see its leadership position consolidated following the acquisition of companies in Europe and America.
SYNERGIES WITH CARLYLES PORTFOLIO
With more than 130 companies in its portfolio, Carlyle has accumulated an extensive experience in companies similar to Applus that can generate synergies: engineering and value added (QinetiQ largest R&D center in Europe, IVM Auto Vehicle engineering), technologies (Avio European leader in aeronautic and aerospace components, Beru world leader in diesel injection systems), automotive, (Edscha, General Motors Transmissions, Hertz rent-a-car) and oil and gas (Petroplus, Kinder Morgan, Magellan Midstream, Legend Natural Gas), amongst others.
Additionally, Applus will count on the support of Carlyle around the world through its network of more than 27 offices and local private equity professionals (United States, Mexico, Hong Kong, Dubai, India, Japan, Korea, Singapore, China, France, Germany, Italy, United Kingdom, Spain, Luxembourg, Sweden and Australia).
The acquisition will be financed through a combination of sponsors equity, and financing provided by a group of banks including, among others, Barclays Capital, Calyon, Caja Madrid, Société Générale and ICG among others.
Carlyle has been advised by the law firm Latham & Watkins, led by José Luis Blanco; financial co-advisors including Goldman Sachs, led by Antón Arriola, and GBS Finanzas, led by Juan Antonio Samarach; due diligence team, KPMG, led by Fernando García; strategic consultants, Bain & Co, led by Teresa Martín-Retortillo.
Applus is the largest Spanish inspection, certification and technological services company. With revenues of 546m in 2006, the Group currently employs 8,500 people and is present in more than 30 countries worldwide. Since its foundation in 1996, the Company has shown a track record of strong growth. The key acquisitions over the last years have been Soluziona Calidad y Medioambiente, integrated in 2005, and RTD, the Dutch market leader in non-destructive testing in Europe, which was acquired in 2006.
Applus activity is organized around four different business lines:
* Auto Vehicle Inspection; represents half of the business and includes technical inspection of vehicle security and gas emissions in Spain, USA, Denmark, Finland and Latin America. Through this business line Applus is the second largest company in the sector in Europe.
* Engineering, Testing and Certification; comprises testing services, laboratory analysis as well as all kinds of certifications according to defined standards (ISO, EU, etc.). LGAI and IDIADA are the two business units that integrate this division.
* Inspection & Technical Assistance; includes inspection services, technical assistance, construction and project management as well as consulting services. The business focuses on large clients operating electricity networks and public construction works amongst others.
* Non-Destructive Testing; includes non-destructive tests and inspections to verify the maintenance of both existing facilities and new constructions (industrial sites, power plants, oil pipelines, etc.). In this segment, Applus is the second largest company in Europe through its subsidiary RTD.