[THE INVESTOR] The Carlyle Group which is looking to sell off Korea’s No. 2 security firm ADT Caps plans to offer a debt financing package to attract more bidders for what could be the biggest M&A deal in two years, industry sources said on Nov. 3.
Carlyle has reportedly asked Woori Bank and Korea Investment & Securities to draw up a financing package worth around 1.5 trillion won (US$1.34 billion) to offer to potential buyers.
Industry sources said the move is expected to speed up the acquisition process. The sale of ADT Caps could mark the biggest deal involving PEFs in Korea after MBK Partners-led consortium bought Homeplus, a Korean discount store retail chain, from Tesco for US$6.1 billion in September 2015.
Since the acquisition, ADT Caps saw its sales grow from less than 600 billion won in 2014 to 693 billion won last year. EBITDA, which is the basis of M&A valuation, also rose to 250 billion won from 190 billion won during the same period. The figure is expected to reach 280 billion won by end-2017. Market insiders expect the deal could surpass 3 trillion won (US$2.6 billion), if the same EV-to-EBITDA three years ago, is applied.
Carlyle and its deal advisor Morgan Stanley recently sent out an investment teaser. Carlyle plans to close the deal by early 2018. Some of the potential bidders include CVC Capital Partners, KKR, TPG and Bain Capital as well as Korean conglomerates SK Group and LG Group, according to media reports.
Carlyle bought ADT Caps in an auction for US$1.93 billion in February 2014 from New Jersey, US-headquartered Tyco International. The deal was the largest-ever PEF buyout deal in Korea since 2008.
ADT Caps is a member of Korea’s fast-growing security systems market. Data from the Korea Information Security Industry Association shows that the market grew by 7 percent on average for last three years and is expected to maintain a similar growth rate until 2021.
By Park Ga-young (firstname.lastname@example.org)