UPDATE: Tech Pacific acquired by CVC Capital Partners Asia

UPDATE: Tech Pacific acquired by CVC Capital Partners Asia

Independent capital buy-out firm, CVC Capital Partners Asia, has acquired a majority share holding in Australia’s largest distributor, Tech Pacific.

In a deal completed late last Thursday, CVC acquired a 58.5 per cent holding in the Tech Pacific Group – which employs more than 1500 people in Australia, New Zealand, Hong Kong, Singapore, Malaysia, Thailand and India – for an undisclosed amount. Tech Pacific’s parent company, Hagemeyer, will keep 31.5 per cent and Tech Pacific the remaining 10 per cent.

The Tech Pacific Group of companies has been sold to Techpac Holdings Limited, an investment vehicle established by CVC Asia Pacific Limited.

“The ultimate sources of funding for this vehicle are international pension funds and Citigroup. Since these new owners preferred the business to be supported with the continued expertise and extensive network of Hagemeyer’s worldwide relationships, Hagemeyer will keep an interest in the Tech Pacific Group via a participation of 31.5 per cent in the equity of Techpac Holdings Ltd, “ Hagemeyer said in a statement.

Representing more than 60 IT and telecommunications manufacturers in the world, the Tech Pacific Group is the largest distributor in the Asia-Pacific region with sales in 2002 of approximately $2.8 billion. According to Hagemeyer, the total consideration for 100 per cent of the Group’s shares is approximately $345 million.

“The divestment of Tech Pacific marks the completion of the transformation of the Group from being the owner of a diverse portfolio of businesses into a value-added B2B distribution services group focusing on the markets for electrical materials, safety and other MRO products,” Hagemeyer chairman Rob ter Haar said in a statement following the deal’s announcement.

“We are very pleased that Tech Pacific has found a reputable new parent that is committed to building its presence in distribution in the region.”

According to Tech Pacific’s MD, Kerry Baillie, the deal is purely financial in nature and will not affect the structure or management of the operation.

“I think this is good news for us,” Baillie said. “Basically, it’s a hands-off arrangement, so there will be no changes in the way we do business, there will be no changes to our structure, management or staff.”

“They’re here as an investor and they will assist us in any financial matters because of their relationship with banks. That should make life easier for us.”

CVC Asia Pacific managing director, Andrew Cummins, confirmed no management or structural changes are to be expected as a result of the sale.

“Tech Pacific is an attractive investment opportunity for us, with businesses in seven countries across Asia,” he said.

“It will be business as usual for Tech Pacific, its staff, customers and suppliers. There is an excellent executive team in place which will go forward with the business, consolidating its position as the market leader in Asia.”

CVC had planned to acquire the Tech Pac Group in 2001, but pulled out due to Tech Pac's unsatisfactory financial performance. Tech Pacific will be CVC’s first IT distribution acquisition in Asia-Pacific, but not its first Australian investment – the firm had previously invested in Australia’s Pacific Brands.

For more on this story see future editions of ARN.

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