FL Selenia Swapped for $1 Billion


Italian lubricant supplier FL Selenia SpA is changing hands again. Kohlberg Kravis Roberts & Co. has agreed to buy it from Vestar Capital Partners in a deal valued at 835 million (U.S. $1 billion), the private equity firms announced Monday.

KKR is the third investment firm to buy Selenia in the past five years, but it has deeper pockets than any of the previous owners. KKR officials said they plan to tap its resources to help Selenia management reach ambitious growth targets.

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We intend to support [Chief Executive Officer] Aldino Bellazzinis strategy to grow the business both organically and through acquisitions in Europe, Asia and the Americas, as the companys growth plans are aligned with our firms substantial capital resources, long-term investing horizon, and global reach, Managing Director Johannes Huth said.

Based in Turin, Italy, Selenia claims to be Europes largest independent supplier of branded automotive lubricants, with annual sales revenue of 550 million. It was formed in 1912 as the lubricant division of Fiat, and still derives a large chunk of its revenue from factory fill and aftermarket sales for the Italian carmaker.

But Selenia has broadened its business in recent years with a strategy based on tie-ups with original equipment manufacturers. It also has technical and commercial agreements with tractor-makers Case New Holland and Same Deutz Fahr, commercial vehicle manufacturer Iveco, and motorcycle and moped manufacturer Piaggio. Case New Holland and Iveco are both owned by Fiat. Selenia also boasts local agreements with Subaru and Honda.

Selenia officials said the company remains on its own acquisition bent and that a deal to buy a European supplier of aftermarket lubricants is imminent. They did not identify the target company. In 2003, Selenia purchased Italian industrial lubricant blender Rondine Azienda Petrochimica. Three years earlier it acquired Viscosity Oil, a supplier of hydraulic transmission fluid for agricultural equipment, from Pennzoil-Quaker State.

The size of Selenias business has grown rapidly in recent years. It had revenue of 350 million in 1999, the last full year before private equity firm Doughty Hanson and Co. bought it from Magneti Marelli, a Fiat joint venture auto components supplier. Doughty Hanson paid 428 million British pounds (U.S. $498 million). Three years later, the price tag to Vestar was 670 million (U.S. $752 million).

Selenia officials have said in the past that they aim to reach revenues of 800 million by 2008, with 75 percent of the growth coming from acquisitions. Management would like to reduce its dependence on Fiat, which has encountered difficulties in recent years.

KKR, which is based in New York, appears to have more resources to help achieve those goals. Since its founding in 1976, it has invested $162 billion in 130 transactions. Vestar, also headquartered in New York, was formed in 1988 and has invested $17 billion in 50 transactions.

Bellazini said Selenia will retain its management team. The company owns four blending plants – two in Italy and one each in Spain and Brazil. It markets lubes under several brand names, including Selenia, Paraflu, VS, Ambra and Tutela.

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