Private equity firm Clayton Dubilier & Rice (CD&R) has agreed a deal to buy Germany-based packaging group Mauser from Dubai International Capital (DIC) for around 1.25 billion euros ($1.72 billion), two sources familiar with the matter said on Sunday.

The deal is one of the largest asset disposals by a state-owned investment fund in the emirate since its debt crisis at the turn of the decade, which forced a number of these vehicles to reschedule debt worth billions of dollars.

Reuters reported on Thursday that CD&R was in advanced talks to acquire Mauser, which makes packaging equipment such as cans and drums for transporting medical waste and other hazardous chemicals.

Commenting on the move, David Smoot, the chief executive officer of DIC, said: “Mauser has been a very successful investment for DIC, providing a return of approximately double our equity invested. We partnered with a strong management to improve the group from both a strategic and financial perspective, and now is the right time for it to continue its development under new ownership."

Mauser, he stated, was well positioned to drive further growth and profitability given its attractive global platform.

Mauser Group CEO Hans-Peter Schaefer thanked DIC for supporting the group through what was an incredibly successful period of growth for the business.

"In the seven years under DIC’s ownership, we worked closely together to increase Mauser’s footprint and customer offering, as well as significantly improve its operational efficiency. I am looking forward to working with CD&R to continue building on Mauser’s success," he noted.

The Dubai fund, part of Dubai Holding, the personal investment vehicle of the emirate's ruler, Sheikh Mohammed bin Rashid al-Maktoum, was advised by Bank of America-Merrill Lynch. CD&R was assisted by Credit Suisse, according to the sources.

Under DIC’s ownership, Mauser significantly increased its footprint across key products and geographies. Mauser now operates out of 83 facilities across 18 countries, up from 53 facilities in 12 countries in 2007.

Profit margins are now industry-leading and have steadily increased from 2007 to 2013. During this period adjusted ebitda margins expanded from 10.7 to 12.3 per cent.

Mauser was put up for sale earlier this year, having been bought by DIC from JP Morgan's buyout unit in 2007, in a deal which valued the firm at 850 million euros.

At one stage it seemed the Mauser sale would be part of an auction involving two other DIC assets - British engineering group Doncasters and German alumina manufacturer Almatis - but this is was scrapped and a sole process for Mauser was pursued.

CD&R edged out interest from a number of other parties, including a joint bid from buyout firm Ardian in combination with industry rival Technoplast and one from Pamplona.

The New York-headquartered fund is lining up a syndicated loan of around 1 billion euros to back the purchase, or 6.25 times Mauser's roughly 154 million euros in ebitda (earnings before interest, taxes, depreciation and amortisation).

The loan is likely to be covenant-light and a mix of dollars and euros, split between first and second lien leveraged loans, banking sources had said previously.

Sonja Terraneo, the partner of CD&R said: “Mauser has a strong track record of innovation, which has helped the company firmly establish itself as a market leader."

"There are exciting opportunities for further growth and we are looking forward to working with the management team to unlock value and continue to deliver success,” he added.-Reuters and TradeArabia News Service