CVC Capital Partners will acquire a 25.01 per cent stake in German chemicals and energy group Evonik Industries AG in a bid valued at €2.4 billion ($3.71 billion).
CVC is buying the stake from the government-owned RAG Foundation, which was set up to assume the liabilities of Germany's coal-mining industry, in return for the proceeds of selling Evonik.
The acquisition followed a months-long battle, involving three other investment funds, including Blackstone, KKR and Bain Capital, reports said.
CVC offered the best price and agreed on on future strategy, said RAG. ''It wasn't just the financial side of things that made us choose CVC," said RAG Foundation spokesman Klaus-Henning Groth.
Evonic will now go for an initial public offer and a listing on the DAX within five years. The two will also retain it as an integrated company rather than break it up, Growth said in a statement.
RAG had, earlier this year, frozen plans to float Evonik and opted for an auction of the minority stake, which reportedly attracted unsuccessful bids from Bain Capital LLC, Blackstone Group LP and Kohlberg Kravis Roberts & Co.
Evonik has interests in energy and real estate and specialty chemicals businesses. The company expanded its chemicals business with the acquisition of Degussa AG from power generator E.ON AG in 2004.
Evonok operates in the areas of specialty chemicals, a field in which it ranks among the top global players. Its chemicals business area comprises three segments: technology specialties, consumer solutions and specialty materials.
With over 100 production sites in 28 countries around the world, 20 per cent of the company's sales account for products, processes and applications developed in the past five years, the company says. The company also claims to have over 20,000 patents and pending patents.
Its eight German coal-fired power plants have a total capacity of 7,300 megawatts, while the housing units it owns directly or through subsidiaries make it one of the country's biggest landlords, according to the report. Evonik had an EBIT of €1.35 billion and sales of €14.4 billion in 2007.
Evonik is planning to expand its specialty chemicals business in Eastern Europe and Asia, expand the energy business, build power plants in emerging markets and add to the real estate business by acquiring new portfolios.
The agreement with CVC marks one of the biggest private equity deals in Europe since the credit market crunch last fall.
The acquisition, which is subject to the approval of German and European anti-trust authorities, will give CVC a minority blocking stake under German law.
Buyout firms have announced $119 billion of takeovers so far this year, about a quarter of the $403 billion of deals announced in the same period last year.
CVC is raising more than 11 billion euros for a new leveraged buyout fund after amassing 10 billion euros for takeovers in 2005 and 2006.