Posted by Andy Cattanach, UK on February 12, 2003 at 04:44:27:
Latest news from UK (Taken from http://www.brassbandworld.com/ ):-
Rutland announces £33M acquisition of Boosey & Hawkes Musical Instruments Division
Rutland Fund Management ('Rutland') announces that it has exchanged contracts for the conditional acquisition of the musical instrument division of Boosey & Hawkes plc.
A new company, 'The Music Group Limited', has been formed to acquire the business from Boosey. The business comprises some of the worldıs leading instrument and accessory brands including Buffet Crampon (clarinets), Rico (reeds), Höfner (guitars), Besson (brass), Paesold (strings) and Keilworth (saxophones). The Group operates on a worldwide basis with a global distribution network and manufacturing operations in Europe, the USA and the Far East. In 2001, the Group had sales of £71m and operating profit (after head office costs) of £6.5m.
Rutland believes that the business has an outstanding brand portfolio and will benefit significantly from Rutlandıs active management approach. This will enable completion of an operational restructuring, a closer focus on manufacturing efficiency and the introduction of improved financial and operating controls.
Rutland is paying a cash consideration of £33.2m for the business which will be acquired on a debt free/cash free basis. By virtue of a working capital mechanism to be calculated at completion, the consideration is subject to adjustment. It is anticipated that this adjustment will result in a payment from Boosey of approximately £8.0m which will be used to address restructuring costs and the costs of the transaction. A provisional payment of £6.5m will be paid by Boosey at completion. The acquisition will be funded with £14.6m from The Rutland Fund and with acquisition debt provided by Royal Bank of Scotland. On completion, The Rutland Fund will hold 85% of the equity with the senior management of the Group holding the balance.
The investment in The Music Group will be Rutlandıs fifth investment within The Rutland Fund and will take the aggregate investment of the £210m fund to approximately £89m.
Commenting on the investment, Rutlandıs Nick Morrill said:
'We are excited by the prospect of working with the management of the new group and believe that Rutland can add significant value to the business. We are acquiring an outstanding collection of brands at an attractive price and a business which has great potential.
The sale process was extremely demanding and the operating improvements sought in The Music Group are extensive. Both factors make it a prime example of how Rutlandıs investment focus differentiates it from mainstream private equity investors.'
Completion of the acquisition is conditional, inter alia, on the approval of Boosey shareholders which is expected to take place at the end of the month.
Background information.
Rutland Fund Management is an active management private equity group. Its investment focus is the recognition of an underperforming companyıs potential and the delivery of strategic and operational measures to build value by redressing and revitalising the companyıs performance.
Rutlandıs senior management team has worked together for over twelve years and gained considerable experience as active managers of Rutlandıs investments. They established a successful track record of investments of a similar nature in their management of Rutland Trust PLC during the 1990s before establishing the £210m Rutland Fund. Rutland Trust PLC is one of the principal investors in the Fund alongside other institutional investors.
Rutland closed the Fund in March 2001 and, to date, has completed four investments and one divestment. Investments include Wolstenholme, a leading manufacturer of pigments and coatings for the print and plastics industries; Openshaw, one of the leading distributors of print supplies in the UK; Edinburgh Woollen Mill, a retailer with 278 outlets in the UK, servicing tourists and the mature shopper; and Interfloor, Europeıs leading manufacturer of underlays for carpets and laminated flooring. Rutland successfully sold Edinburgh Woollen Mill in November 2002.
A typical Rutland investment will involve a company with mature products or services that is facing strategic challenges, or is experiencing commercial or financial difficulties, or is in need of restructuring. It will have defensive properties through its market niche, asset underpinning or other forms of competitive advantage and possess good operating management. The value of the company will typically range from £20 million to £150 million, and it will be UK based. Through its active management approach, Rutland will seek to assist the operating management to effect a transformation of the prospects for the company.
The Music Group is a new company formed to acquire the instrument manufacturing companies that were formerly part of the Boosey & Hawkes Group. The acquisition of these companies was carried out by The Rutland Fund, a UK-based private equity group, with participation by the senior management team.
The Music Group brings together eight global brands, each with its own unique character and unrivalled position in the market. The Music Group is a world leader in the manufacture and distribution of band and orchestral instruments and accessories, offering around the world some of the oldest and most prestigious brands: Besson, Buffet Crampon, Karl Höfner, Julius Keilworth, Roderich Paesold, Rico, W. Schreiber & Söhne and Jakob Winter.
The Groupıs aim is to focus specifically on the manufacture and distribution of musical instruments and accessories. It has worldwide manufacturing, sales and service network. The Music Group places great emphasis within its manufacturing operations on environmental protection and the use of a high percentage of materials from sustainable resources, whilst pursuing a strong global ethical employment policy.