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CVC minority stake acquisition values Hempel at $3.6bn

By Ryan Luk, Aviral Jain, Keerthi Komati and Dhruv Kotecha (University of Nottingham), and Carlotta Nardello (ESADE)

Photo: Ahmed (Unsplash)


Overview of the deal

Acquirer: CVC Capital Partners

Target: Hempel

Total Transaction Size: $1.08bn

Closed Date: n/a

Acquirer advisor: n/a

Target advisors: n/a

CVC Capital Partners is buying a minority stake in the Danish paints and protective coatings provider, Hempel, valuing the company at $3.6bn. CVC is a leading global private markets manager with approximately $186bn of assets under management. Hempel ultimately manufactures painting and coating solutions for marine, industrial and yacht segments to name a few. This investment would result in the first outside shareholder of the company in 75 years, as the business has been independently owned by the Hempel Foundation. However, the Hempel Foundation has decided to take the opportunity to welcome a minority investor that should bring in capital to support Hempel’s growth journey, as well as acquiring new brands in the future, to help break into new segments and geographies. After seeing Hempel’s impressive development over the past years, CVC is expected to hold this investment for an extended period of time, and is excited to help Hempel in supporting the development of new, sustainable technologies to provide benefit to Hempel's customers.

"CVC Strategic Opportunities invests in high-quality businesses with longer growth horizons, often partnering with like minded families and foundations looking for specific expertise to advance expansion. Our investment in Hempel aligns perfectly within this strategy, especially the partnership with the Hempel Foundation and we are eager to begin to leverage CVC’s expertise to support the continued success of this world-class business." Michael Lavrysen, Partner at CVC

Company Details (Acquirer - CVC Capital Partners)

CVC is a leading alternative investment manager focused on Private Equity, Secondaries and Credit, with a presence in 29 cities, more than 125 PE portfolio companies and a total of €168bn under management. The company works with seven complementary strategies defined by region and industry sector, through which they invest mainly on behalf of pension funds.

CVC's main competitive advantage is its ability to use its global resources when sourcing new investment opportunities, as well as creating value in its assets under management. CVC has had many investments under the spotlight such as its acquisition of Petco in 2016 for $4.6bn, and in 2023 it raised the largest global private equity fund at €26bn.

CVC continues to be in the top companies in the Private Equity International’s ranking were in 2023 it was 15th out of 300. 

Chief Executive Officer: Rob Lucas

Founding Year: 1981

Headquarters: Luxembourg City, Luxembourg

Number of Employees: 850+

Revenue: EUR 1.09 billion (2023)

AUM: EUR 168 billion (2023)

Company Details (Target - Hempel)

Hempel A/S is an international producer of paints and coatings mainly supplying to marine and yacht industries, whilst also specialising in protective and decorative paints. The Danish company’s experience and expertise in the protective coating industry allows for their clients to have built up strong relationships, primarily based off brand loyalty.

Hempel has differentiated itself from competitors by being one of the first coatings companies to focus on renewable energies and the industrial market in 1980. The huge success allowed for Hempel to diversify and become a global supplier with factories in Denmark, USA, Hong Kong and Kuwait.

Hempel aims to stay at the forefront of the paint and coatings industry which is moving at an increasingly faster rate and aims to do this by welcoming CVC’s funds on board.

Chief Executive Officer: Michael Hansen, JC Hempel (died 1981)

Chairman: Richard San

Founding Year: 1915

Headquarters: Copenhagen, Denmark

Number of Employees: 7,500+

Revenue: EUR 2.159 billion (2022)

Projections and Assumptions

Short-term consequences

As with many private equity acquisitions, the initial months will consist of CVC learning more about Hempel’s style of management and operations. This will lead to CVC tailoring the business to what they believe will be the most efficient way for them to grow in size and value. Departments could be restructured, and Hempel employees will face a lot of uncertainty during these times as CVC attempts to streamline various integral parts of the business and cut costs. CVC’s plenitude of experience in this area will allow for the processes to be conducted more efficiently. That being said, CVC only holds a 30% ( minority) stake in Hempel, which suggests that other shareholders will also have a say in what changes the company should undergo. This could lead to compromises being made between shareholders, which could positively or negatively affect the business. The acquisition could attract regulatory attention, which may make it a little more difficult for CVC to implement their ideas successfully.

Long-term Upsides

Hempel A/S faces long-term challenges as it pursues ambitious sustainability goals, including a substantial reduction in environmental impact and compliance with regulations. As a part of Hempel’s "Futureproof" strategy, the company aims to cut its direct carbon emissions (Scope 1 and 2) by 90% by 2026 and eliminate waste to landfill by 2025. It is believed that CVC’s recent acquisition of a 30% stake in Hempel provides crucial support in integrating sustainability into all aspects of product development and operations.

With CVC's capital infusion, Hempel can accelerate research and development of sustainable products, such as biocide-free coatings, which are essential for reducing environmental pollution. Additionally, CVC's expertise in operational efficiency can help optimise Hempel's processes, minimising resource consumption and waste​.

Moreover, CVC’s extensive network and strategic partnerships can facilitate collaboration with other industry stakeholders, promoting innovation and the adoption of best practices in sustainability. This collaboration is vital for Hempel as it seeks to expand its market presence, especially in regions with stringent environmental standards, thus driving growth while adhering to its sustainability commitments​​.

Through these combined efforts, CVC can significantly aid Hempel in achieving its sustainability targets, ensuring the company’s transformative growth and enhanced environmental stewardship in the competitive coatings industry.

Risks and Uncertainties


Considering that CVC is buying a minority stake of Hempel this deal doesn’t seem to entail a lot of risks, especially due to the fact that they are the only outside company currently owning Hempel, who has been a big player in the paints and coating industry. CVC is investing through its Strategic Opportunities fund which allows them to have a holding in Hempel for up to 15 years. We can thus guess that CVC is expecting to drive Hempel into a new era of cutting edge technology and sustainability, as well as allowing it to further grow in the industry through shared expertise and capital. The outlook is that Hempel’s dividends will also grow thanks to this collaboration, which always shows signs of healthy prospects for the business.

However, because CVC is the first outside shareholder, we can expect some uncertainties into how the main holder, Helper Foundation, will react, managerially speaking, to this newcomer. Indeed, the relative success of this deal will be mainly based on how well CVC will collaborate with the Hempel Foundation to ensure a great integration and alignment of visions with the previously family-owned corporation. It will thus be crucial for the time that CVC will keep this minority stake, that Hempel learns to leverage the expertise of CVC so as to drive future transformative acquisition opportunities to keep Hempel at the forefront of this industry whose competitive landscape is moving very quickly.




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