DBAG-backed Duagon buys MEN from HQ Equita

Oscar Geen
05 April 2018

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Deutsche Beteiligungs AG (DBAG) portfolio company Duagon has acquired Mikro Elektronik (MEN) from HQ Equita.

DBAG Fund VII will invest €50m and the GP will contribute €11m from its balance sheet as an equity co-investment into Duagon to finance the transaction.

HQ Equita has fully divested its shares in MEN but the founder and former majority shareholder Manfred Schmitz will retain a stake.

The sale ends a five-year holding period for HQ, which acquired the company with capital from HQ Equita 3 in May 2013.

DBAG acquired Swiss railway network component manufacturer Duagon in June 2017. The GP made a €74m equity investment, comprising €60m from Fund VII and €14m from its balance sheet.

MEN employs 300 people and generated €60m in sales in 2017, whereas Duagon reported sales of CHF 20m for the same period and employed 60 people at the time of DBAG's acquisition.

Previous funding
HQ Equita acquired MEN in May 2013, drawing equity from its €315m buyout fund, which held a final close in May 2007. Deutsche Bank and Sparkasse Nürnberg provided debt for the transaction.

Company
Established in 1982, MEN designs and manufactures failure-safe computer boards and electronic components for rugged and harsh environmental conditions. The company's products are used for applications in industrial functions, mobile equipment such as trains, aircraft and commercial vehicles, as well as in mining and in medical equipment. In 2017, the company generated approximately half of its €60m revenues from computer systems for railway vehicles.

People
Deutsche Beteiligungs AG – Rolf Scheffels (member of management board).
HQ Equita – Hans Moock (managing director).
Duagon – Markus Dilger (CEO).
Mikro Elektronik – Bernd Härtlein (CEO).

Advisers
Acquirer – Alantra (corporate finance); Roland Berger (commercial due diligence); KPMG (financial due diligence); Latham & Watkins (legal); Marlborough Partners (debt advisory); ERM (ESG due diligence); Gleiss Lutz (ESG due diligence).
Vendor – GCA Altium (corporate finance); Goetzpartners (commercial due diligence); Alvarez & Marsal (financial due diligence); Watson Farley & Williams (legal).