International private equity firm, Cinven, today announces that it has signed an agreement for the sale of CeramTec GmbH (‘CeramTec’ or ‘the Group’), a leading global manufacturer of high performance ceramics, to a BC Partners-led consortium including the Public Sector Pension Investment Board (PSP Investments) and Ontario Teachers’ Pension Plan (together the ‘BC Partners Consortium’) for an undisclosed consideration.
Headquartered in Plochingen, Germany, CeramTec manufactures high performance ceramics for various end-markets including medical, automotive, industrial and electronic. Its proprietary product portfolio includes hip replacement implant components (notably the BIOLOX® brand), high speed cutting tools and electrical / thermal ceramic solutions. The Group employs more than 3,400 people across 20 facilities worldwide. In the 12 months to June 2017, CeramTec generated revenues of €538 million and adjusted EBITDA of €196 million.
Cinven acquired CeramTec in August 2013 from Rockwood Holdings, Inc. for €1.5 billion. During Cinven’s ownership, CeramTec has performed strongly increasing revenues from €425 million to €538 million and improving its EBITDA margin from 32% to 37% while investing substantially in new capacity and growing its work force by more than 300 people to over 3,400.
In particular, Cinven worked with CeramTec to:
Streamline the organisation and strengthen Group management with the reorganisation from 16 independent business units to two business segments – Medical and Industrial; the appointment of a new management board including the new CEO, Henri Steinmetz (March 2016), and new COO of the Medical business, Dr. Hadi Saleh (July 2015); and the strengthening of the team below the Board level.
Accelerate organic growth through investment in additional capacity including the Medical plant expansion at Marktredwitz (€40 million investment), supporting innovation and product development, increased focus on strategic customers and accelerating growth outside of CeramTec’s historical home markets particularly into the United States and China;
Increase productivity and capital efficiency through intensive ongoing improvement programmes and centralising production management, resulting in substantially increased margins and free cash flow generation; and
Execute a successful value-accretive buy and build strategy with the acquisitions of US-based DAI Ceramics (in 2015) and the UK-based Electro Ceramics division of Morgan Advanced Materials (in 2017) reinforcing CeramTec’s strength in aerospace and piezo ceramics.
Bruno Schick, Partner at Cinven and Head of the Frankfurt office, said:
“CeramTec has been a highly successful investment due to a combination of factors: Cinven’s sector expertise, in both Healthcare and Industrials; our longstanding presence and track record in Germany which enabled us to identify and execute the transaction; our international capabilities facilitating the Group’s expansion into the US and China; and our focus and conviction. We have worked alongside an excellent management team, as well as a highly qualified and dedicated workforce at CeramTec and we wish them every success in the future. We are delighted that the BC Partners consortium is acquiring CeramTec and will continue to invest in the business.”
Pontus Pettersson, Partner at Cinven, added:
“CeramTec is an excellent business with great prospects. We have worked hard to transform the Group into a more agile, commercial and global enterprise delivering strong financial results. We have invested significantly, strengthened management, simplified the organisation and improved efficiency and product innovation. We accelerated organic and international growth and executed a number of value-add acquisitions creating a first class high performance ceramics business.”
Henri Steinmetz, Chief Executive Officer at CeramTec, commented:
"Our journey from a German-centric technology leader, towards a truly global market leader is well under way. Over the past four years we have doubled our ceramic implant capacity in Marktredwitz, we have simplified the organisational set-up in our Industrial segment and we have created a leading platform in piezo ceramics with the UK acquisition of Morgan Advanced Materials. We are very grateful to Cinven for its leadership and its commitment to transforming and growing our business and we look forward to working with our new owners together as partners to realise the next stage of growth."
The completion of the sale of CeramTec is subject to customary regulatory approval and expected in the first half of 2018.
Advisors to Cinven on the CeramTec transaction included: BofA Merrill Lynch (M&A), Morgan Stanley (M&A), Clifford Chance (Legal), McKinsey (Commercial), PricewaterhouseCoopers (Financial), Ernst & Young (Tax) and ERM (Environmental).