Management buy-out: DBAG invests in Karl Eugen Fischer
Frankfurt am Main — Deutsche Beteiligungs AG (DBAG) is investing in Karl Eugen Fischer GmbH (KEF), the world’s leading company for the development and manufacture of cutting systems for the tire industry. DBAG Fund VII, advised by Deutsche Beteiligungs AG, will acquire the majority of the shares as part of a management buyout; they will be sold by funds advised by Equistone Partners Europe. DBAG will initially invest up to €23.5 million for its co-investment. In the target structure, they will in future hold around 20 percent of the shares in the company. Further shares besides DBAG Fund VII will be held by the company’s management. The closing of the purchase agreement signed yesterday is scheduled for the end of this month. The parties have agreed not to disclose the purchase price.
The latest acquisition marks DBAG Fund VII’s fourth MBO structured since the fund’s investment period began in December 2016. With a volume of just over one billion euros, it is the largest private equity fund initiated and advised by a German private equity company. After four transactions, around one third of the investment commitments are now committed.
Tire manufacturers use the machines produced by KEF (www.kefischer.de) to assemble mainly rubber-coated steel wire and fabric layers (so-called calendered cord material) for tire carcasses and tire belts. These layers form the supporting structure of the tire and give it shape and driving stability. They are precisely cut with equipment from KEF machines. Since the development of the first steel cord cutting line in 1970, a “Fischer line” has become a generic name: Nine of the ten most successful tire manufacturers in the world now rely on the company’s machines, whose global market share is around 70 percent. Production takes place at the company’s headquarters in Burgkunstadt (Upper Franconia), where more than 500 of the total workforce of 545 are employed. There is a sales and service company in both the USA and China. In 2017, 83 million euros were turned over.
Cutting systems are crucial for a smooth production flow. KEF machines are technological leaders in this respect: They are characterized, for example, by high precision and low material losses, both important success factors. With a high level of vertical integration, KEF ensures that the machines adapted to the respective customer requirements can be delivered in the desired quality and on time. The company has been working with its customers for decades in the development of the machines and is a preferred supplier for quite a few tire manufacturers. Based on its outstanding technological position, KEF is expected to benefit from the increasing demand for tires and thus for corresponding production facilities. To this end, investments will be made in expanding capacities in the coming year, for example with the construction of a further assembly shop in Burgkunstadt.
Mechanical and plant engineering and automotive suppliers are two of Deutsche Beteiligungs AG’s four core sectors; in the past ten years alone, DBAG has invested in ten companies from these two sectors. “With our experience and focus on investments in medium-sized companies, we are the ideal partner for the company,” commented Dr. Rolf Scheffels, member of the DBAG Management Board, on the transaction. “We see further potential for Karl Eugen Fischer in view of the tire manufacturers’ investment plans and market developments,” Dr. Scheffels added.
“Our company has benefited from the support of private equity funds since the founding family sold the company more than ten years ago — they have supported our business,” explains Simone Thies. The commercial director points to the average annual growth of five percent in sales and the number of employees since 2005. He added: “We are sure that with DBAG we will also be able to exploit the opportunities that lie not only in market growth, but also in further expansion of the service business in view of the large number of turbines installed.”
Advisor DBAG: Gleiss Lutz
DBAG’s compliance advice was provided by a Gleiss Lutz team led by Dr. Eike Bicker (lead, partner) and including the following lawyers: Marina Stoklasa, Domingo de Prada, Dr. Christoph Skoupil (all compliance, Frankfurt), Dr. Moritz Holm-Hadulla (partner), Dr. Dominik Braun, Dr. Vanessa Gehle (all antitrust, Stuttgart).
At Deutsche Beteiligungs AG, Mr. Florian Döring (General Counsel) advised on the acquisition and coordinated the process.
Gleiss Lutz regularly advises DBAG and other international and national private equity investors on investments in promising companies, including in the area of venture capital.
Deutsche Beteiligungs AG is a listed private equity company. We initiate closed-end private equity funds: DBAG funds enable institutional investors to invest in the equity or equity-like instruments of unlisted companies. DBAG advises and manages these funds. In other words, it seeks out, examines and structures opportunities for participation. We negotiate investment agreements, accompany the portfolio companies during the investment period and design the divestment process. We co-invest alongside these DBAG funds with funds from our own balance sheet. A DBAG share thus provides access to a portfolio of unlisted companies and, at the same time, to a successful fund advisory business.
Our focus is on medium-sized companies. Their business models and markets are what we have been dealing with for decades.