Deal in Focus: PE backers sell Euro-Druckservice to DPE

A consortium of private equity backers advised by Kartesia has sold Euro-Druckservice (EDS) to Deutsche Private Equity (DPE) for an undisclosed sum.

Headquartered in Passau, EDS is a provider of sheet-fed and web-offset printing. The company currently has 12 subsidiaries in Austria, Poland, Czech Republic and Hungary, providing printing services mainly to publishing companies and large retailers like Tesco or Carrefour. In 2016, EDS reported sales of €275m with a workforce of approximately 1,500.

AltaCap (Kartesia), European Capital (whose shares in the business were owned by Ares prior to the sale) and Darby Private Equity took the largest stakes in the company's refinancing in 2013 when former majority shareholder 3i made an exit.

Jaime Prieto, managing partner and founder of Kartesia, says you have to be prepared to change your role when things go wrong: "When the financial crisis hit the region, we assumed the leading governance role, changed the management structure and strengthened the company’s financial and market position to eventually get a very good outcome. This is the result of relentless team work and perseverance."

EDS was originally acquired by 3i Group in 2007 in a buyout financed by a €150m debt package arranged by Dresdner Kleinwort, comprising €105m of senior debt and a €45m mezzanine package with a €10m contribution from European Capital. The deal was a carve-out from Verlagsgruppe Passau, which decided to divest its non-core publishing divisions. Rothschild ran the auction, which attracted mainly financial investors.

3i then wrote off its investment in a restructuring that was completed in 2014. This left AltaCap (advised by Kartesia), European Capital and Darby Private Equity in control of the company. LGT acquired European Capital earlier this year but Ares retained the stake because it was on the books of the American part of the business and so did not go to LGT with the European Capital portfolio.

Get to work
With its new structure in place, Prieto highlights three ways in which the new shareholders improved the company: "Firstly we had a stronger focus on operations and we appointed Jesus Castillo as CEO. Jesus has previous experience of running a similar company in Spain and Romania, so he had a strong operational focus."

Secondly, it focused on exporting its service to western Europe at the same time western European retailers were expanding in the other direction." Large retail chains are pushing hard into the more untapped markets in Eastern Europe, so that created opportunity for us," says Prieto.

Finally, EDS focused on expanding its operations in its home market with a consolidation play. "We made sure to capitalise on our leading position in CEE to provide best in class services to local and international retailers. We reinforced this with acquisitions, particularly in Hungary," says Prieto.

This resulted in strong revenue growth from around €200m in 2014 to €275m for 2016. EBITDA also increased by 50%, according to a source close to the situation.

DPE plans to continue with the consolidation strategy that the previous owners initiated. Prieto says the fit with management was good. "DPE will look to continue the strategy agreed with management of growing in the CEE region," he says. The GP made the investment from DPE Deutschland III, a €575m vehicle that held a final close in January 2017.  The auction was run by DC Advisory.

People
Deutsche Private Equity – Frank Müller (managing partner).
Kartesia – Jaime Prieto (managing partner).
Euro-Druckservice – Jesus Castillo (executive chair).

Advisers
Vendor – Deloitte (financial due diligence); Clifford Chance (legal).
Company – DC Advisory (M&A).

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• Deal in focus