U.S. private equity firm Kohlberg Kravis Roberts has bought German car part retailer Auto-Teile-Unger (ATU) for $1.75 billion, KKR said on Wednesday, after a plan to sell ATU shares in the stock market foundered.
British private equity firm Doughty Hanson, the previous majority owner with 72 percent, agreed to sell its stake after ATU's initial public offering (IPO), set for June 16, was shelved due to a lack of interest.
Doughty said the deal, which KKR expects will close in August, represented a return on its cash investment of 3.5 times. It acquired ATU in July 2002 for an undisclosed sum.
Germany's IPO market has been stuck in the doldrums for the past two years. Besides ATU, two other firms have called off their IPOs. Postbank's massive 1.55 billion-euro ($1.88 billion) listing had to be made cheaper to get off the ground.
KKR has more than 10 years of experience in automotive retailing through an investment in U.S. car part retailer AutoZone . It said it jumped at the chance to buy ATU after the IPO flopped.
"We looked at this asset two years ago when Doughty bought it and have followed it ever since," KKR partner Johannes Huth told Reuters. "We seriously started discussing it when they postponed the IPO."
Although the private equity firm said in a statement that it aimed to take the company public in the next five to seven years, Huth did not exclude setting an earlier date.
"We're not going to come out immediately with an IPO unless suddenly the markets are going very well," he said. "Otherwise we'd go out and hold it for a normal holding period and sooner or later try to take it public again."
ATU, which had 2003 sales of about 1.1 billion euros, operates more than 450 car part and repair outlets throughout Germany, Austria and the Czech Republic.
The company, based in northern Bavaria close to the Czech Border, said in a statement that it's business hadn't suffered since its IPO hopes were dashed.
"KKR, with its long-term track record of sustainable value creation, is a strong partner with whom we see a clear perspective for the further growth of the company," ATU Chief Executive Werner Aichinger said in a statement.