Last updated: August 30, 2012 5:52 pm

Carlyle in $5.15bn deal for DuPont unit

Carlyle, the US private equity group, has struck a $5.15bn deal with DuPont, one of the world’s biggest chemicals companies, to buy its performance coatings business.

The transaction is the latest in a flurry of dealmaking for Carlyle that has made it the most active private equity firm so far this year, according to Dealogic, with 17 deals worth a collective $15bn.

Under the terms of the deal, which was bigger than had been expected, Carlyle will pay $4.9bn in cash and assume $250m of unfunded pension liabilities. It beat final bids for the unit from Apollo Global and a consortium of Kohlberg Kravis Roberts and Onex. A consortium including Blackstone and Bain Capital, which had previously been interested in the unit, dropped out before the final bidding round.

The performance coatings division primarily sells products to paint suppliers for big US car manufacturers such as Ford and General Motors. It is on course for revenues of about $4bn this year and employs about 11,000 workers.

Ellen Kullman, DuPont chief executive, said a sale to a private equity group made strategic sense for the unit, noting that there had been a lot of consolidation in the coatings industry over the past decade.

“Our performance coatings business is very large and in a great position globally, so for there to be more consolidation from a strategic nature was probably tough,” she said. “Private equity can take that and invest in it and continue to build it out.”

For Carlyle, the acquisition caps a summer of intense dealmaking. Most recently, it bought Getty Images for $3.3bn from Hellman & Friedman, a San Francisco-based private equity firm.

Greg Ledford, head of industrials and transport for Carlyle, said that the rush of deals this year reflected opportunities arising all at once on companies that had been targets for some time. “Financing markets are good, so it’s a good time to be a seller and a buyer.”

Although Ms Kullman denied that the business was for sale as recently as July, discussions with interested parties began more than a year ago, according to people familiar with the situation.

Ms Kullman expressed irritation on Thursday at the press coverage of the negotiations around the sale, saying it was “appalling that the media would focus on innuendo and not on fact”.

Asked if investors had a right to know about the talks leading up to the disposal, Ms Kullman was adamant. “Absolutely not,” she said. “We do not comment on speculation or rumours.”

“I’ve been very clear that we continue to evaluate our portfolio and if there is any news to share, we’ll be the first to bring it out and share,” she said. “As this deal was consummated just hours ago, I think we’ve been very timely with our communication.”

DuPont said the $250m in assumed pension costs accounted for half the liability in the pension fund for workers in the division. It said it would tell investors in October how it planned to eliminate the remaining costs associated with the unit.

Ms Kullman said the deal should have few problems securing approval from US antitrust authorities since Carlyle does not own any competing businesses. The transaction is expected to close in the first quarter of next year.

DuPont shares were trading 0.3 per cent lower at $49.81 in early trading in New York.

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