A second billion-dollar deal in four days at D’Ieteren Group. With BlackRock, Carglass gets Wall Street’s most influential player on board.
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A trio of investors around the fund giant BlackRock buy 13 percent of Belron, the company above Carglass. They value Belron (including debt) at 21 billion euros, which brings D’Ieteren Group’s share in the Carglass parent to 8.6 billion: 30 percent more than what all of D’Ieteren was worth on the stock exchange on Monday evening.
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It was no longer a secret that Belron was the crown jewel of D’Ieteren Group. But the valuation of 21.1 billion euros that three investment giants posted on Monday evening surprised even optimistic analysts.
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The essence
- A number of investors, including BlackRock, are buying a stake in Carglass parent Belron for 2.2 billion.
- The Brussels holding company D’Ieteren owns 50 percent of the shares in Belron, which is valued at 21 billion euros (including debt).
- That valuation is significantly higher than most analysts thought.
- Last week, D’Ieteren bought a minority interest of 40 percent in TVH Parts for 1.2 billion euros.
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BlackRock, together with two other investment funds, Hellman & Friedman and the Singaporean GIC, are buying 13 percent of Belron for 2.2 billion euros. CD&R is responsible for the majority of the sale, but D’Ieteren Groep is also diluting its interest from 54.8 to 50.01 percent by converting preference shares into ordinary shares.
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Belron is one of the world’s largest players in the repair and replacement of car windows, with Carglass as its best-known brand. The company has been part of D’Ieteren Group for several decades decennia
. Four years ago, this brought in a partner with the investment company CD&R to free up cash to invest in activities outside the automotive sector. Until recently, this diversification did not materialize: D’Ieteren Group only bought the notebook brand Moleskine, but did not enjoy it much. Last Friday, that expected big prey arrived. D’Ieteren Group bought a minority interest of 40 percent for 1.2 billion euros the seller of parts for forklifts, construction and agricultural machines TVH Parts.
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Profiel Belron
Main shareholders: D’Ieteren Group (50.01%), CD&R (24%), Hellman & Friedman (9%), BlackRock and GIC (4%), management and the founding family (13%).
Number of customers: 14.9 million in 40 countries.
Turnover (2020): 3.9 billion euros, spread over the US (2.16 billion euros), the eurozone (1.2 billion euros) and the rest of the world (523 million euros).
Adjusted operating profit: 583.1 million euros.
Adjusted Operating Margin: 15 percent.
Net profit: 178 million euros.
Number of employees: 25.784.
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The interest in Carglass and co. was great because the company is going through golden years. The reason for this is in the four letter word ADAS (advanced driver assistance systems). ADAS is a collective name for a growing arsenal of sophisticated driver assistance and safety systems in new cars. With every window replacement, those sensors, radars and cameras must be calibrated. That requires specialist work and a lot of investment. Small players often do not have enough deep pockets to continue to actively follow this technological market. From 2022, all passenger cars must be equipped with ADAS.
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CD&R paid 620 million euros for the 40 percent stake in Belron at the end of 2017 and has not complained. Belron has grown significantly since then. This prompted the two main shareholders to repeatedly put additional debt on the company’s balance sheet, which led to hefty dividends and distributions. In this way, CD&R has already cashed out about 900 million euros and has more than earned back its investment. For the price that BlackRock and co. pay now, the value of Belron has more than increased tenfold in four years.
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Belron has long been regarded as the crown jewel of the Brussels family holding company D’Ieteren Group. In addition to Belron, the holding consists of D’Ieteren Auto, which imports the Volkswagen brands VW, Audi, Skoda, Seat, Porsche, etc. and partly sells it through its own dealers. The group also has a real estate arm and the notebook brand Moleskine.
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Analysts estimate until last month that Belron is worth between 10 and 12.4 billion euros. Given the market capitalization of D’Ieteren Group – more than 6 billion euros – investors received the car division, real estate, Moleskine and the cash mountain ‘for free’. The holding discount was estimated at about 30 percent by most analysts.
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That changed last Friday with the entry into TVH Parts. The cash mountain of more than 2 billion euros has been halved and in exchange there will be a cash machine of size: TVH Parts has an operating profit margin of more than 20 percent. A level that even the crown jewel Belron does not reach (15 percent).
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The Man of 8,000 Billion
Now CD&R is selling a 13 percent package in Belron to a trio consisting of Singaporean investment company GIC, American Hellman & Friedman and BlackRock. That is it fund of nearly $8,000 billion from founder and CEO Larry Fink.
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It had been clear for some time that CD&R was looking for a buyer part of its stake in Belron. Analysts took into account a valuation of Belron at around 10 to 11 billion euros. That’s what makes Monday’s deal so exceptional. The investment trio judges that Belron is worth 17.2 billion euros.
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That means that the three together pay 2.23 billion euros for a 13 percent interest. D’Ieteren remains the largest shareholder (50.01 percent), followed by the remainder of CD&R (24 percent), Hellman & Friedman (9 percent), BlackRock and GIC (together 4 percent). The Lubner management and founding family own the remaining 13 percent.
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