3i targets more sell-offs after £615m disposal

BRITISH investment giant 3i yesterday sold its plastic equipment business Mold-Masters to US rival Milacron for C$975m (£615m), pleasing investors who want the business to pay down its debt pile.

Proceeds from the deal will be around £219m – 2.6 times the initial £84m investment 3i made in October 2007. The company said there had been a “highly competitive process” with interest “from a wide range of private equity and strategic buyers”.

The sale is part of 3i’s new strategy, adopted last year, to boost its share price through a series of disposals. Chief executive Simon Borrows, brought in 18 months ago to oversee the turnaround process, has already cut a substantial number of jobs and yesterday told investors to expect further sell-offs over the next eighteen month.

“This transaction is yet further evidence of the strong and measurable progress that we are making against our strategic agenda,” Borrows said.

“Since announcing the new strategy for 3i in June last year, we have wasted no time in implementing the restructuring of 3i and delivering against the immediate priorities and targets that we set out.”

The sale of Canada-based Mold-Masters will help 3i meet its target of reducing gross debt, which stood at £1.2bn at the end of 2012, to below £1bn by June.

Last month the company revealed that activist investor Edward Bramson’s Sherborne Investors has been buying shares in the company, although 3i insists there has not been any direct communication between the two parties.

ADVISERS

ROBERT W.BAIRD
CHRIS MCMAHON
TRISH HANSEN

3i turned to international financial services group Robert W. Baird to advise on the sale of Mold-Masters, employing the services of managing directors Chris McMahon and Trish Hansen.

McMahon has been with Baird for 11 years and currently leads the company’s global M&A activities, as well as being co-head of the Chicago office. His 25 years of investment banking experience includes stints at Credit Suisse First Boston and ABN Amro.

Hansen works in Baird’s consumer and industrial group, having joined the business in 2000 after six years with consultancy group Arthur Anderson.

Further advice was provided by Houlihan Lokey’s Jim Lavelle, co-head of the business’s industrials group. Lavelle previously founded and managed M&A advisory firm Nassau Group for 12 years. Before that he spent five years working for Baring Brothers in both New York and London.

Morgan Stanley’s Lawrence Steyn was also involved in the deal.

Legal advice was provided by Chris Torrente, a corporate partner at Kirkland & Ellis’s New York office, who has also worked with Boeing and Bain Capital.

3i began planning the sale of Mold-Masters in summer 2012, with an auction following in the autumn. The deal is expected to close by April 2013.