BDT Capital’s Culligan goes for Primo Water’s European biz

Pharma sector gains momentum.

Today, the opening topic is sustainability. We’ve seen plenty of deals tapping into the sustainability trend and now we have one in the water sector. BDT Capital-backed Culligan International agreed to acquire sustainable drinking water service provider Primo Water Corporation’s European business.

Next, we look at how the tide is turning for pharma services investments in a listicle on 11 PE-backed deals in the sector since May, with comments from Baird’s Tom Cowap on what’s driving the deals and trends to look out for. KKR, Triton, Bain Capital and Kartesia are among the firms buying and selling in the sector.

Lastly, I will wrap up by rounding up this week’s exit highlights: Blackstone exiting a 35% stake in an owner of resort hotels in Southern Europe to GIC, ICG signing a pact to sell a technology consultancy company to Accenture, NorthEdge selling a UK-based specialist logistics provider to Sitra Group and MidEuropa agreeing to exit a convenience and proximity supermarket chain to Ahold Delhaize.

Water supply

Sustainability consciousness is increasingly influencing consumer choices in all areas of life, and what’s better than a sustainable drinking water option?

Yesterday, we reported Culligan International, a portfolio company of BDT Capital Partners, agreeing to acquire sustainable drinking water service provider Primo Water Corporation’s European business.

The transaction is valued at up to $575 million. The portfolio includes businesses in much of Europe, including Germany, France, Spain and Poland, but excludes the UK, Portugal and Israel businesses. Those latter businesses will be sold in 2024.

Primo Water provides services in North America and Europe. Based in Tampa, Florida, it generated around $2.2 billion in annual revenues in 2022.

Pharma plays 

It seems like there is plenty more investment activity to look forward to in the healthcare sector, especially in pharma services. We reported 11 PE-backed deals in the sector, signaling an increase in appetite.

The pharma services sector is subject to ideal conditions as long-term trends are making the businesses more attractive and capital demand dynamics are driving investments into the sector, Tom Cowap, managing director at financial services firm Baird, told PE Hub Europe.

Contract research organisations (CROs) are one area doing well, according to Cowap. They used to be “simple capacity outsource plays for big pharma”, he said, but with biotech becoming a key source for the global drug pipeline, CROs are being used “to fully support their drug development programme”. He added: “This in turn has led to the CRO sector changing in nature – becoming a true strategic partner to its client base.”

PE is also increasingly concerned about macroeconomic pressures and the threat of recession, which is making “defensive” healthcare-related sectors like pharma services more attractive.

Cowap noted that the rising level of consolidation in small molecule discovery CRO is a trend to look out for as there has been an uptick in PE money into the sector and more consolidators than ever before.

“This is still a nascent sector with a number of very small players supporting a large market and room for differentiated providers to post strong growth both organically and acquisitively,” he said. PE’s expansion into the sector will drive consolidation, particularly in Europe, he added.

KKR, Triton, Bain Capital and Kartesia are among the firms buying and selling in the sector.

Check out the full listicle to learn the trends to look out for in the sub sector and the firms involved in the deals.

For more on pharma services, check out Nina Lindholm’s deep dive on Partners Group and GHO Capital’s investment in Sterling Pharma Solutions.

Partial exit 

Moving on, we reported four private equity exits this week.

Before we get into it, I will quickly recap some figures we have on exits. Exit totals increased to 467 globally in the third quarter, up over 5 percent quarter over quarter and nearly 22 percent year over year, according to a report by S&P Global.

First up is Blackstone selling a roughly 35 percent stake in Hotel Investment Partners (HIP), an owner of resort hotels in Southern Europe, to GIC.

Blackstone will continue to be a majority shareholder in HIP.

Tech exit

Intermediate Capital Group (ICG) has agreed to sell 6point6, a technology consultancy company, to Accenture.

Bye Abbey 

NorthEdge has completed the sale of Abbey Logistics Group, a UK-based specialist logistics provider, to Sitra Group.

In agreement  

Lastly, MidEuropa has agreed to sell Profi Rom Food, a convenience and proximity supermarket chain, to Ahold Delhaize for an enterprise value of around €1.3 billion pre-IFRS16 (€1.8 billion post-IFRS 16).