Aurelius agrees to acquire Armstrong ceiling businesses from Knauf

Aurelius Equity Opportunities SE & Co. KGaA (ISIN DE000A0JK2A8) (“Aurelius”) has announced the signing of binding contracts for its acquisition of the Armstrong ceiling tiles and grids businesses in Austria, Estonia, Germany, Ireland, Italy, Latvia, Lithuania, Portugal, Spain, Turkey and the UK from Knauf International GmbH (“Knauf”).

The transaction follows Knauf’s agreement to acquire Armstrong World Industries Inc’s EMEA and Pacific Rim business (“Armstrong EMEA”) in 2017. In order for this deal to complete, Knauf is required by the European Commission to sell the businesses Aurelius is acquiring (“the company”), which consist of two production facilities situated in Team Valley/UK and business operations and sales capabilities across 11 markets. The company will continue to trade under the Armstrong name for an agreed period of time.

The company provides mineral fibre tiles and grids for modular suspended ceilings to commercial properties, with its products widely used in offices, schools and hospitals across Europe. With estimated combined 2019 revenues of £75m, it is a high quality, profitable company, that enjoys a leading position in the markets in which it operates. On acquisition, Aurelius will execute a complex carve out of the company from its parent business, establishing it as one standalone entity, whilst ensuring a smooth transition for customers.

Going forward, Aurelius will work very closely with the management team to take advantage of the growth opportunities available across all non-residential construction sectors. Aurelius will support the company in implementing an extensive, multi-year capital investment programme, which is designed to deliver substantial technical and specification upgrades to both the mineral fibre and grid production facilities at the Team Valley sites. This will enable the two facilities to produce, in-house, all tiles and grid products that are sold by the company across the geographic markets it serves.

Fritz Seemann, member of Aurelius’ Executive Board, commented: “This is an exciting company, which produces high-quality products that are well regarded and widely used across its 11 markets. Our status as a pan-European investor positions us well to offer the new standalone business the support it needs across the multiple countries in which it operates. Similarly, our extensive experience working with businesses in the manufacturing space, as demonstrated in our recent successful exit from Solidus Solutions, makes Aurelius a fantastic partner for the company’s next stage of development. We look forward to working with the management team to share this expertise and establish this company as an independent entity, ready to take advantage of the opportunities that exist within its marketplace”.

Christophe Lloret Linares, managing director of the company, added: “This is a highly complex carve out, which is well suited to Aurelius’ expertise and track record. We look forward to working with the team at Aurelius who will provide the support we need as we establish ourselves as a standalone business and enter the beginning of an exciting period of investment and growth”.

The deal marks Aurelius’ second corporate carve out transaction in Q3 following its acquisition of BT Fleet Solutions in August 2019. These investments follow Aurelius’ sale of Solidus Solutions in June of this year, the Group’s largest exit to date.

The financial terms of the deal have not been disclosed and completion remains subject to the approval of the European Commission among other relevant competition approvals. Aurelius was advised by Eversheds Sutherland (Legal), Linklaters (Anti-Trust counsel) and KPMG (Tax). Knauf Ceilings was advised by PwC (Corporate Finance) and Freshfields Bruckhaus Deringer (Legal).