SaarGummi-Gruppe (Germany) - Dec 2007

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01 December 2007

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Odewald & Compagnie Gesellschaft für Beteiligungen mbH has acquired rubber manufacturer SaarGummi-Gruppe from private equity funds advised by Orlando Management. Rothschild has advised on the transaction. SaarGummi is acquired through Odewald’s Fonds III, which closed on E610m in July 2007.

Odewald & Compagnie had looked at the company a few years previously, but as it was a turnaround case, this did not match its investment criteria. After the successful turnaround conducted by Orlando, Odewald & Compagnie saw itself as well-positioned to support the company’s growth phase, also due to its experience and knowledge in the global automotive sector. An excellent relationship with the management and successful development of BOA, a portfolio company of the second fund which had a similar starting position, as well as executive experience of the partners were cited as important factors to winning the bid.

The investor was attracted by the management, market leadership of SaarGummi, as well as strong development potential in non-automotive sectors. Odewald & Compagnie plans to increase international activities (especially in Russia and China) and in best cost locations, consolidate the industry further and capitalise on the company’s technological competency in other fields of applications. The current management is retained.

Debt

The mandated lead arranger is Landesbank Baden-Württemberg. The co-arranger is Norddeutsche Landesbank.

Company

SaarGummi-Gruppe is a manufacturer of EPDM-based sealing profiles for automotive and industrial applications. The company has production facilities in Germany, Spain, the Czech Republic, Slovakia, Brazil, the US and India. Based in Schengen, Luxembourg, the company employs 3,900 staff and generated a turnover of around E390m.

Exit deal

In 2004, Orlando Management GmbH acquired SaarGummi-Gruppe from RAG Saarberg AG, a wholly-owned subsidiary of energy group RAG Aktiengesellschaft (October 2004, page 21). The investor has restructured the corporate orphan into a fully-integrated mid-sized technology company. During the investment, the company was grown through the acquisition of two competitors, ElaTech Group with two production plants in Germany, and ContiTec Profile GmbH, with one production plant in Germany, located in Hanover, one in Spain and another in Slovakia.

The first and second level of management were exchanged and the investor invested in modernisation of the German and US plants and sold off the operations in Canada. Joint ventures were established in Russia, Croatia and China and two new greenfield plants were opened in Spain and Slovakia. The investor placed a strong emphasis on product and process innovation.

Following the completion of the restructuring, the company has developed a stable cashflow and is ready to expand into emerging markets such as China and India under new ownership.

People

Dr Henrik Fastrich and Dr Stephan Rosarius handled the transaction for Orlando Management. Professor Dr Ernst-Moritz Lipp represented Odewald & Compagnie.

Advisers

Equity - Heuking Kuhn Luer Wojtek, Pär Johansson (Legal)Equity - Marsh, Heidi Melsheimer (Insurance Due Diligence)Equity - Porsche Consulting, Cornelius Clauser (Other Due Diligence)Equity - PricewaterhouseCoopers Frankfurt, Lars Lawall (Tax)Equity - PricewaterhouseCoopers Frankfurt, Anthony Koopmans, Frank Sauer (Financial Due Diligence)Vendor - ERM, Werner Schulte (Environmental Due Diligence)Vendor - Ernst & Young, Bernd Rehberger, Cord Stuemke, Lutz Pfreundtner, Willi Wingenfeld (Financial Due Diligence)Vendor - Ernst & Young, Jan Dannenberg, Oliver Wyman (Commercial Due Diligence)Vendor - Linklaters, Agnes Bosse, Beate Stüve-Brammen, Christian Kleeberg, Christoph Götz, Julia Schechner, Karl Peter Schäfer, Kathrin Pickavé, Markus Birkenmeier, Markus Ebert, Stephan Fletcher, Sybille Podszun, Wolfgang Döring (Legal)Vendor - Linklaters, Düsseldorf, Carsten Grave, Nina Laskey (Legal)Vendor - Linklaters, Frankfurt, Carl-Peter Feick, Mariana Castro, Steffen Schellschmidt (Legal)Vendor - Rothschild, Alexander Bischoff, Hannes Kaltenbrunner, Thomas Kästele, Ulrich J Paefgen (Corporate Finance)Vendor - Rothschild , Dominik Spanier, Heinrich Kerstien, Simon Bard (Other Due Diligence)Vendor - Rothschild , Dominik Spanier, Heinrich Kerstien, Simon Bard (Other Due Diligence)