Goldman Sachs Capital Partners and France's PAI Partners yesterday said that they would jointly buy out family-owned German building materials group Xella International GmbH. Other bidders in the race to acquire the maker of bricks, drywalls and building materials, included Irish firm CRH plc and Austria's Wienerberger AG.

Xella, which was founded in 2002 out of the Haniel Group's existing building materials portfolio, has become a world market leader for aerated concrete and calcium-silicate blocks. It was no longer considered core in the long-term strategic orientation of the Haniel Group, which generated sales of €29.2 billion in 2007.

Goldman and PAI will pay Franz Haniel & Cie GmbH, the German family-owned investment group that owns Xella, around $3.2 billion. Xella had sales of  of €1.3 billion last year.

Haniel said ot had undertaken a detailed evaluation of all options, and at the beginning of the week, accepted the management board's recommendation to sell its construction materials division Xella, to sell it to the Goldman - PAI consortium adopting a structured bidding process, during which Haniel Group was advised by Deutsche Bank, Deloitte and Clifford Chance.

It said that after regulatory approvals, the transfer of ownership would apply retrospectively as of 31 March 2008.

''Our corporate social responsibility and optimisation of profit are the two equally weighted values at Haniel with regard to the strategic positioning of our portfolio'', said Eckhard Cordes, CEO of the Haniel Group. ''These two motifs have been key to us in the process of looking for an appropriate new owner for Xella and we are convinced to have found the right partners with the adequate financial strengths and industrial expertise.''

Jan Buck-Emden, CEO of Xella International GmbH said, "We want to continue our profitable growth and have convinced our new investors that our business plan for the future will create sustained value for Xella. We see growth opportunities, particularly in the Eastern European markets.''

For PAI, this transaction is in keepping with its investment strategy to invest in strategic market leaders where it has identified opportunities to create value through further market consolidation and operational upsides.

"We are very pleased with this acquisition," said Mirko Meyer-Schönherr, partner, Head of PAI partners Germany. "Xella is a leading producer of wall products as well as lime and limestone, with strong market shares in all its markets."

"Xella is a very well-positioned building materials company with a strong track-record and attractive growth opportunities, in particular in Eastern Europe. We are convinced of Xella's strategy of profitable growth in promising markets and will work together with the experienced management team and highly qualified employees to implement it successfully", says Martin Hintze, responsible for the German speaking region at Goldman Sachs Capital Partners.

Xella Group operates in three business segments building materials, dry lining systems and raw materials. Brands such as YTONG, HEBEL and SILKA make Xella the world's largest manufacturer of aerated concrete and calcium-silicate blocks, while FERMACELL is a leading gypsum fiberboard brand. Its raw materials division Fels-Werke is one of the leading suppliers of lime and limestone in Europe.