Sponsor-backed Milexia begins talks for bolt-on deals

Breaking News 25 May

Sponsor-backed Milexia begins talks for bolt-on deals

Milexia, a French distributor of electronic components, has begun talks that could lead to a potential bolt-on deal by 1Q24, Matthieu Anorga and Stéphane Vermot-Desroches of sponsor Crédit Mutuel Equity, told Mergermarket.

The company plans to strengthen its footprint in markets where it already operates and to expand to Benelux and the Nordics, especially Sweden, Norway and Denmark, Private Equity Associate Anorga and Director Vermot-Desroches said.

Milexia, which specialises in high-tech electronic components, systems and scientific instrumentation supply, would acquire peers with the same offering as itself in countries where it does not already operate, whereas in Italy, Germany, UK and Spain, it would rather focus on companies with complementary products, Milexia's CEO Xavier Gaillard added.

Crédit Mutuel Equity announced this month that it acquired a majority stake in Milexia. It supports the company’s M&A plans and its team have already reached out to colleagues in Germany and Brussels regarding potential acquisitions, Vermont-Desroches said.

Historic investors Société Générale Capital Partenaires, Bpifrance and Isatis Capital still own a minority stake as well as the company's three founders and management, Gaillard said. 

Crédit Mutuel Equity plans to double by 2028 the size of Milexia, Vermont-Desroches said. The company registered EUR 140m revenue last year, Gaillard added. Milexia has a score of 17, according to Mergermarket's Likely to Exit predictive algorithm.*

Milexia will focus on peers generating EUR 10m to EUR 50m revenue, Vermont-Desroches said, adding that the ideal blueprint for future acquisitions was Composants Electroniques Lyonnais (CEL), a French peer Milexia bought this month and which registered EUR 20m revenue in 2022, as reported.

When asked whether Milexia would mandate a financial advisor for its M&A strategy, Anorga said “all options are on the table”. The company would rather mandate advisors in countries where Crédit Mutuel Equity does not have a footprint, Vermont-Desroches added.

The sponsor did not set a budget for this acquisition, as it has deep pockets but would rather focus on finding a good match for Milexia, Vermot-Desroches said. 

Milexia was established in 2006 from a merger between Italian Microelit and French Elexience, Gaillard said. Headquartered in Saclay, Paris region, it has 200 employees across the UK, Spain, Germany and Italy, he added.  

The company operates in sectors including defence, space industry, transportation, telecoms and healthcare. Rather than distributing electronic solutions, it advises its customer base on what type of products it would need to acquire, Gaillard said. 

Competitors operating in the same market include distributors like US-based Mouser, Digi-Key, Avnet , he said, and identified as peers British Acal BFi and US-based RFMW

Milexia completed a management buy-out in 2011 with Naxicap, followed by an owner buy-out in 2015 led by its management, Gaillard said. In 2018, Société Générale, Bpifrance and Isatis entered the company, as reported. It completed its first leveraged buyout (LBO) with Crédit Mutuel Equity this year.

The LBO followed a very competitive process with several players expressing interest, but the management appreciated the fact that we have an international footprint and are long-term investors, Anorga added.

*Based on a number of key industry, holding behaviour, and dealflow criteria, Mergermarket's next-generation platform assigns a Likely to Exit (LTE) score to each exit opportunity, with a higher score corresponding to a higher likelihood for an imminent transaction.

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