Sun shines with latest mid-market deal

Oliver Smiddy – Financial News

Mid–market private equity firm Sun European Partners has maintained the heady pace of dealmaking that saw it complete a record number of transactions last year, by completing an acquisition in the pharmaceuticals sector, and remains confident that now is the time to do deals.

Michael Kalb, a senior managing director at the firm, declared, “It’s a great time to buy companies which are set to benefit from general economic growth over the next few years”.

A chairman of another European mid–market firm which has also maintained its dealflow through the crisis said: “People who have been able to continue to buy assets through the downturn will come out smelling of roses. Those who stopped doing deals through the crisis, like rabbits frozen in the headlights, will be mown down.”

Sun’s European arm yesterday agreed to acquire a UK–based pharmaceutical group, NextPharma Technologies, for an undisclosed sum.

The US arm of the buyout group also completed three bolt–on acquisitions for its portfolio companies, acquiring heat–transfer product manufacturers Covrad and Serck Heat Transfer for portfolio company ThermaSys, and women’s sportswear brand Rebecca Taylor for its Kellwood clothing business.

The deals come after a record year for the firm in which it completed 14 deals in Europe worth a total of $800m, and 37 acquisitions globally, according to a spokesman. From a global perspective, it was the group’s second busiest year since its inception in 1995, according to Kalb.

Sun European was launched in 2004. Kalb said: “We used to focus heavily on distressed assets – what some might call ’low–hanging fruit’. It was a good way for our European team to build its reputation quickly. But we have since evolved our strategy to target not just distressed assets, but underperforming and healthy companies. That has certainly been a factor in increasing the universe of possible acquisitions.

“We also found last year that there were fewer people making acquisitions, so there was decreased competition for assets. Prior to 2008 there were a lot of firms trying to do deals – the market was congested,” he added.

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