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Sale Of Challenge Group to Megadyne s.p.a

Justin Levine, TheNonExec, acts as Corporate Finance lead to secure sale of Challenge Group Limited.

We are pleased to have acted for Hong-Kong based Challenge Group in its recent sale to Italian manufacturer Megadyne s.p.a.

Conceived in 1979, the Challenge Group produce and sell a wide range of mechanical power transmission products to over 100 countries globally. With production hubs in Ningbo, China, the company operates wholesale distribution channels in Africa, Australia, Germany, UK, & Ireland covering all key industrial markets.

Megadyne s.p.a develops and manufactures polyurethane and rubber belts for power transmission and conveying systems, as well as complementary products such as rubber hoses and metal pulleys. Its headquarters are in Turin, and it serves more than 30,000 customers from 15 manufacturing plants and 33 distribution centres around the world. The company employs more than 2,300 people and in 2017 generated sales worth €319m.

Conducted in parallel to the €2Bn merger of Megadyne and Ammeraal recently reported in the Financial Times and Drives and Controls, this transaction was particularly complex. Working closely with legal specialist Steele Raymond, the project involved over fifty M&A professionals, accountants, tax advisors and legal professionals including KPMG based out of Milan.

Supporting Bill Cody, CEO & Chairman through the whole process, we were delighted to receive the following commentary:

“Justin acted as CF in the recent sale of Challenge Group to Megadyne s.p.a. The deal was particularly complex, with transactions in Australia, South Africa, China as well as the UK and Ireland involving share and asset sales.

“The deal was further complicated by including one of the Group’s main distributors in the deal. This involved another group of shareholders with a separate set of agreements. Justin spent significant time with me and the team to fully understand our business in these different locations and was a massive help in putting together a professional IM for both deals.

“He had an excellent understanding of the Groups financial structure with multiple holding companies and consolidations and joined me in trips to all our locations.. I was very impressed by his quick grasp of the issues and his sound advice in dealing with them. During a busy time in Justin’s work calendar he devoted many days and weeks (and weekends) to this M&A project that at one point had 49 professionals accessing the Databank. Justin co-ordinated it all.. He brought on board a really excellent UK based legal team to handle the transactions and together with their lead partner, Justin managed this financially complex deal.

“He was superb at managing these complexities across multiple financial and legal jurisdictions and drove the project for all sides.

“A first class M&A professional, highly recommended. You will not find better or a nicer guy to work with”

Bill Cody, CEO and Chairman, Challenge Group

As part of a global leader, the Challenge business will continue to prosper and we wish all the team huge success going forward.