Dealmaker Hands in talks to buy German packaging specialist

The buyout baron Guy Hands is in talks to buy a German packaging group in a deal that will test his new approach to funding takeover deals.

Sky News has learnt that Terra Firma Capital Partners, Mr Hands' private equity group, is holding discussions about acquiring Cartonplast Group, which manufactures pads used during the transportation of glass containers and cans.

Sources said this weekend that Terra Firma was the leading contender to buy Cartonplast, which is likely to be valued at several hundred million euros.

They cautioned, however, that a deal was not certain to be struck.‎

Mr Hands is understood to have held discussions last week with a number of prospective investors about financing a takeover of Cartonplast.

The tycoon, who is best-known for his ill-fated ownership of EMI, the music company, has tried to raise his first general buyout fund since 2007 but abandoned those efforts several months ago.

He is now pursuing takeovers on a so-called deal-by-deal basis, which will involve sourcing capital from investors for each specific transaction that he pursues.

Terra Firma's talks to buy Cartonplast, which was bought by Stirling Square Capital Partners more than six years ago, come after a period of professional upheaval for Mr Hands.

In April, Terra Firma's chief executive, Andrew Geczy, quit after an unspecified falling-out with Mr Hands.

Sources said that Mr Hands and Mr Geczy had been "at loggerheads" for some time, with disputes ranging across a spectrum of issues relating to Terra Firma's management.

Guernsey-based Mr Hands is one of the most colourful and prominent figures in British finance, having made his fortune devising leveraged buyouts at Nomura, the Japanese bank.

He has seen his reputation hurt by a number of soured deals and his failure to raise a new private equity fund even as others in the industry have found attracting record-sized capital pools worth many billions of pounds.

In recent years, Terra Firma has generated strong returns from investments including through the €1.3bn disposal of RTR, a solar energy platform.

It has also restructured the finances of Annington, a vast landlord to the Ministry of Defence, which is widely expected to be sold in the next couple of years.

The firm has also been selling sites owned by Wyevale Garden Centres on a piecemeal basis.
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However, Mr Hands has also been fighting a running battle to salvage value from parts of the portfolio of Four Seasons Health Care, Britain's biggest private nursing home operator.

The business's holding company fell into administration in April, with a deadline for initial offers passing last Friday.

A separate portfolio of care homes branded Brighterkind is in the process of being sold, with Patron Capital Partners having been in exclusive talks to acquire it.

Mr Geczy's departure was the latest by a string of top-level executives who have either left or scaled back their roles at Mr Hands' firm.‎

In December, Justin King, the former boss of J Sainsbury, relinquished his responsibilities for the day-to-day management of Terra Firma.

Mr King retained his vice-chairman title, and his boardroom seats at Terra Firma-backed companies including Wyevale and Annington.

The appointments of both Mr King and Mr Geczy represented attempts by Mr Hands to repair relations with investors following Terra Firma's calamitous ownership of EMI.

Despite success in terms of profit growth, the financial crisis and strained relations with Citigroup, EMI's biggest lender, meant that Terra Firma was unable to refinance its debt.

The Wall Street bank eventually seized control of EMI, sparking a bitter legal battle lasting more than five years which tarnished Mr Hands's reputation.

Terra Firma declined to comment on its interest in Cartonplast.