A consortium of companies owned by Li Ka-shing, the richest person in Asia, said Monday that it would pay more than $1 billion to acquire the Dutch waste management company AVR from its private equity owners.
Li's companies have been seeking to expand their already considerable global portfolio of investments in utilities and infrastructure, which include electricity plants in Australia and natural gas networks in Britain.
Under the Euro 943.7-million ($1.26-billion) deal, four Li companies will team up to acquire AVR, which incinerates waste and converts it into energy, from a Dutch company jointly controlled by the private equity firms Kohlberg Kravis Roberts and CVC Capital Partners.
Li, 85, is ranked by Forbes as the eighth richest person in the world, with a net worth estimated at $31 billion as of March.
In a joint announcement Monday, the Li companies said AVR represented a "compelling long-term investment opportunity for the consortium" and "an attractive opportunity for infrastructure investors with the potential for appropriate growth opportunities".
During the buyout boom that preceded the global financial crisis, KKR and CVC teamed up in 2006 led the acquisition of AVR from the municipal government of Rotterdam in a deal that valued the waste management firm at Euro 1.4 billion, including debt.
In 2007, KKR and CVC acquired the Dutch waste collection firm Van Gansewinkel Groep for an undisclosed sum and merged it with AVR.
But the merged Van Gansewinkel Groep has struggled financially in recent years. Despite a 4.7 per cent rise in its revenue to Euro 1.25 billion last year, the company's net losses widened to Euro 65 million from a Euro 25-million loss in 2011.
In a statement Monday, Cees van Gent, chief executive of Van Gansewinkel Groep, described the spinoff of AVR as a "new important step forward".
"With this transaction, we significantly strengthen our financial position," he said, adding that Van Gansewinkel would remain focused on waste collection and recycling after the deal. For its part, AVR remains a profitable business. It has 434 employees and reported revenue of Euro 256 million last year, according to Van Gansewinkel.
Stock exchange filings made Monday by the Li companies said AVR and its subsidiaries reported net profit of Euro 42.3 million last year, more than double the profit of Euro 20.7 million in 2011.
The deal remains subject to approval from the Dutch works council and European anti-trust regulators and is expected to close during the July-to-September quarter, the companies said.
The AVR acquisition is the second time in the past year that the same four Li companies have teamed up to acquire a European utility. Last July, the four companies announced a deal worth £645 million, or $1 billion at the exchange rates of the time, to acquire MGN Gas Networks, a UK company doing business as Wales & West Utilities, that distributes natural gas throughout Wales and southwest England.
Shares in the Li companies rose in Hong Kong trading after the deal was announced. Cheung Kong's stock closed up 3.73 per cent, Cheung Kong Infrastructure rose 2.99 per cent and Power Assets climbed 2.96 per cent. The broader Hang Seng index closed up 1.22 per cent.
© 2013 The New York Times News Service
Li's companies have been seeking to expand their already considerable global portfolio of investments in utilities and infrastructure, which include electricity plants in Australia and natural gas networks in Britain.
Under the Euro 943.7-million ($1.26-billion) deal, four Li companies will team up to acquire AVR, which incinerates waste and converts it into energy, from a Dutch company jointly controlled by the private equity firms Kohlberg Kravis Roberts and CVC Capital Partners.
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Cheung Kong Infrastructure and Cheung Kong Holdings, two companies listed in Hong Kong and controlled by Li and his family, each have a 35 per cent stake in the purchasing consortium. Power Assets Holdings, which provides electricity to Hong Kong Island on a monopoly basis, will have a 20 per cent stake; the privately run Li Ka Shing Foundation will take up the remaining 10 per cent stake.
Li, 85, is ranked by Forbes as the eighth richest person in the world, with a net worth estimated at $31 billion as of March.
In a joint announcement Monday, the Li companies said AVR represented a "compelling long-term investment opportunity for the consortium" and "an attractive opportunity for infrastructure investors with the potential for appropriate growth opportunities".
During the buyout boom that preceded the global financial crisis, KKR and CVC teamed up in 2006 led the acquisition of AVR from the municipal government of Rotterdam in a deal that valued the waste management firm at Euro 1.4 billion, including debt.
In 2007, KKR and CVC acquired the Dutch waste collection firm Van Gansewinkel Groep for an undisclosed sum and merged it with AVR.
But the merged Van Gansewinkel Groep has struggled financially in recent years. Despite a 4.7 per cent rise in its revenue to Euro 1.25 billion last year, the company's net losses widened to Euro 65 million from a Euro 25-million loss in 2011.
In a statement Monday, Cees van Gent, chief executive of Van Gansewinkel Groep, described the spinoff of AVR as a "new important step forward".
"With this transaction, we significantly strengthen our financial position," he said, adding that Van Gansewinkel would remain focused on waste collection and recycling after the deal. For its part, AVR remains a profitable business. It has 434 employees and reported revenue of Euro 256 million last year, according to Van Gansewinkel.
Stock exchange filings made Monday by the Li companies said AVR and its subsidiaries reported net profit of Euro 42.3 million last year, more than double the profit of Euro 20.7 million in 2011.
The deal remains subject to approval from the Dutch works council and European anti-trust regulators and is expected to close during the July-to-September quarter, the companies said.
The AVR acquisition is the second time in the past year that the same four Li companies have teamed up to acquire a European utility. Last July, the four companies announced a deal worth £645 million, or $1 billion at the exchange rates of the time, to acquire MGN Gas Networks, a UK company doing business as Wales & West Utilities, that distributes natural gas throughout Wales and southwest England.
Shares in the Li companies rose in Hong Kong trading after the deal was announced. Cheung Kong's stock closed up 3.73 per cent, Cheung Kong Infrastructure rose 2.99 per cent and Power Assets climbed 2.96 per cent. The broader Hang Seng index closed up 1.22 per cent.
© 2013 The New York Times News Service