[lbo-talk] Dubai Intl Buys UK co Doncasters for $1.24 Bln

uvj at vsnl.com uvj at vsnl.com
Fri Dec 16 04:14:56 PST 2005


Reuters.com

Dubai Intl Buys Doncasters from RBS for $1.24 Bln

Thu Dec 15, 2005

By Siobhan Kennedy and Dayan Candappa

LONDON/DUBAI (Reuters) - Dubai International Capital said on Wednesday it agreed to buy UK engineering company Doncasters Group from Royal Bank of Scotland's (RBS.L: Quote, Profile, Research) equity finance business for 700 million pounds ($1.24 billion).

Dubai International, part of the state-owned Dubai Holding, has been plowing the emirate's oil wealth into high-profile foreign acquisitions, including that of Britain's Tussauds Group, owner of Madame Tussauds waxworks, for 800 million pounds earlier this year.

Doncasters said the sale was subject to U.S. and German regulatory approvals, with completion expected in early 2006.

Some 275 million pounds of the price tag will be paid in cash with the remaining 425 million financed using debt from RBS. Dubai International said the deal was worth 4.5 billion dirhams.

"The acquisition is in line with our mission to take direct investments in leading international firms and blue-chip organizations with the aim of generating long-term shareholder value, whilst creating strategic alliances for Dubai Holding," Dubai International's chairman Mohammed Al Gergawi said in a statement.

Sameer Al Ansari, chief executive of the group, told Reuters by telephone the plan was to build out Doncasters with other smaller acquisitions, both in Europe and North America.

Doncasters builds metal castings and precision components for the engineering and healthcare sectors, among others.

AGGRESSIVE ACQUISITION STRATEGY

"With Doncasters we have an aggressive acquisition strategy, once we acquire it, we already know what we want to buy," Al Ansari said, adding that the acquisitions would begin soon after closing the Doncasters purchase.

He said Dubai International would continue to look to Europe and the UK for other investment opportunities.

"We are very opportunistic in our approach, we're not focused on any particular sector," he said.

"We're looking for companies who are top three in their sectors with high barriers to entry...and where there are substantial growth prospects and a strong management team," he added.

The Gulf Arab investment group is currently on the shortlist to buy automaker DaimlerChrysler's (DCXGn.DE: Quote, Profile, Research) MTU Friedrichshafen heavy diesel engine unit, although sources close to the process have said Swedish buyout firm EQT is on the verge of clinching the deal, having offered a higher price.

A deal to buy MTU would make sense given the Dubai firm recently took a stake in DaimlerChrysler (DCXGn.DE: Quote, Profile, Research) itself, although Al Ansari said the firm would not overpay for MTU, despite its deep coffers of cash.

"We're under no pressure whatsoever to invest, so when we feel prices are becoming unrealistic we'll walk away," he said.

Nonetheless, Dubai's aggressive buying spree signals a shift away from the conservative investment strategies of governments in the world's biggest oil exporting region.

Once content to park petrodollars in Swiss banks and U.S. Treasury bonds, they are increasingly using the windfall from recent record high oil prices to make strategic acquisitions that help diversify their holdings.

As well as traditional buyouts, Dubai International also invests in other private equity firms, such as U.S. giants The Carlyle Group and Kohlberg Kravis Roberts & Co as well as British private equity group 3i Group Plc (III.L: Quote, Profile, Research).

"We're doing that because we see co-investment opportunities because we realize that sitting in Dubai we're not going to be able to see everything that's happening out there," Al Ansari said.

© Reuters 2005. All Rights Reserved.



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