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The headquarters of KraussMaffei company are pictured in Munich, Germany, January 11, 2016.MICHAEL DALDER/Reuters

Onex Corp. is selling a major investment in Europe to a Chinese buyer that has long had its eye on the asset.

The Toronto-based private equity firm is parting ways with plastic and rubber processor KraussMaffei Group for a €925-million ($1.4-billion) cash enterprise value to China National Chemical Corp., a state-owned giant better known as ChemChina.

The sale comes just three years after Onex bought the Munich-based business in a deal valued at $736-million. It was significant for its size and for being Onex's first European-headquartered company acquired after its London office was formed in 2012. KraussMaffei produces injection moulding machines that make plastic things – from car bumpers to sterile disposable plastic syringes – but also has other businesses, such as one that manufactures automated robots.

When Onex bought KraussMaffei, it reportedly outbid a Chinese company. Onex's successful bid was helped by knowledge and connections in the plastics business, the firm said at the time. Onex sold injection molding company Husky International in 2011, giving it expertise that offered a leg up on other KraussMaffei bidders. The plan was to restructure the business, which has roots in a German company founded in 1838, to make it leaner and position it for international growth in areas such as China.

That's the direction ChemChina plans to continue moving, as well as building the business through other parts of Asia. Frank Stieler, CEO of KraussMaffei, said in a statement that ChemChina has been interested in the business for many years. ChemChina has made other significant European acquisitions in recent months, striking a deal for Italian tire maker Pirelli last year.

For Onex and one of its private equity funds, the deal will net a profit of about €670-million on its original investment of €276-million in 2012, the company said late on Sunday.

Scott Chan, analyst at Canaccord Genuity, estimates Onex's internal rate of return, a common measure of private equity performance, will be nearly as high on KraussMaffei AG as the successful sale of Husky, at about 30 per cent as compared with 37 per cent.

The move to sell wasn't expected due to the short holding period, Mr. Chan said in a note. He is watching for Onex to unload some of its U.S.-based businesses in the coming years, including healthcare companies Carestream Health and Res-care, as well as building products business Jeld-Wen.

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