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Case Study

Carlyle Group and the AZ-EM buyout (B): Value creation after the transaction

By Benoit F. Leleux, Balaji S. Chakravarthy and Jonathan Lachowitz

12 pages

September 2009

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Reference: IMD-3-2046

The Carlyle Group’s investment committee, through a unanimous vote, gave Dr. Robert Easton, the go-ahead to make a firm offer to acquire AZ Electronic Materials (AZ-EM) from Clariant. The deal was signed on July 23, 2004 by Easton and the CEO of Clariant. The transaction was valued at €338 million. It had taken significantly longer to complete than first anticipated. The fact that it was a carve-out and that it required different agreements across a host of geographies pertaining to assets and shareholding greatly added to the complexity of the transaction. With the deal done, Carlyle’s attention turned from deal making to creating value. AZ-EM had approximately 750 employees worldwide and 2003 revenues of around €566 million ($702 million). Carlyle had specific expertise in semiconductors and electronic materials through its buyout and venture activities, including investments in Jazz Semiconductor, Ness and CPU Technology, enabling it to support the AZ-EM management team from both an industry and business development perspective. It was also able to maintain and develop AZ-EM’s business internationally thanks to its global presence, with teams across Asia, the US and Europe. AZ-EM’s management team remained largely intact after the sale. Of the 40 senior managers, only the CEO, the CFO and 1 manager in the US were replaced.

Learning Objective

Buyout, due diligence, managing transition, turnaround management, leverage, incentives, restructuring.

Keywords

Buyout, Private Equity, Turnaround, Leverage, Electronics, General Management, Strategy

Settings

Switzerland
Manufacturing, Chemicals
2004-2009

Type

Field Research

Available Languages

English

Related material

Teaching note, Video

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