REV: APRIL 14, 2004
Butler Capital Partners and Autodistribution: Putting Private Equity to Work in France Walter Butler was watching the traffic that rolled past his office along the River Seine in Paris. It was late in the afternoon on April 29, 1999, and he had just been in touch with the investment bank, Lehman Brothers, about a new investment proposal. His private equity firm, Butler Capital Partners, had just raised their $180-million second fund, France Private Equity II, and was considering submitting a proposal on Autodistribution S.A. (AD), the leading independent auto parts supplier in France. “By most accounts, it is a wonderful opportunity, “ lamented Butler as he looked out of his th office in Paris' 8 arrondissement. “Every time I look out the window, more than 10% of the cars I see have parts that come from Autodistribution. And I see a lot of cars.” Yet, Butler had some significant concerns due to the context of the deal. At the beginning of February 1999, the privately held Autodistribution had entered into an agreement with Strafor Facom (SF), a publicly owned industrial products company, to be sold for a combination of cash and SF stock; AD shareholders were to become the largest shareholders of the new entity. However, at the end of March, Fimalac, another publicly owned industrial products company, made a bid for the entire organization shortly before the sale had closed. Fearing that Fimalac would neglect the Autodistribution business, the AD shareholders were forcing the SF management to find an alternative solution for Autodistribution. The major requirement was that the new buyer complete a deal on the same terms (i.e. at the same price of FF 3,455 million1 ($552 million) and under the same conditions, including the same warranties) on which SF had agreed to purchase AD. Butler highlighted his concerns: The AD business is a very attractive opportunity, but some of the constraints of the proposal put quite a strain on the investment decision. Due to the specifics of the deal, not only do we have no flexibility on price, but we also have very little time to evaluate the investment thoroughly. With a little over two weeks to complete the transaction, we not only need to complete our due diligence, but we also need to secure financing. That is no small order, as this could be the biggest buyout in Europe for 1999 if completed. To make things more interesting, it would require an equity commitment 1.5 times the size of our firm’s largest investment to date. This is challenging even if it is perfectly in line with our fund’s charter.
1 The French Franc exchange rate is FF6: US$1.
Professor Walter Kuemmerle prepared this case with Dean’s Fellow William J. Coughlin (MBA ‘99). HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2000 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Butler Capital Partners and Autodistribution: Putting Private Equity to Work in France
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