Enterprise Investors invests in DGS, Poland’s top metal closures manufacturer

The total transaction size is €96 million. An acquisition vehicle controlled by PEF V paid €54 million for DGS shares, while the remaining part will be financed by a loan from Bank Pekao SA and Bank Zachodni WBK. The buyout of DGS shares is the fourth biggest LBO in Central and Eastern Europe.

Krzysztof Grządziel, president and one of DGS’s founding shareholders, is the main force behind the company’s success. After PEF V’s investment he will continue as president and will hold a 20% stake. PEF V has received permission from the Polish antimonopoly office to carry out the transaction.

DGS is located in Włocławek, Poland and has been active since 1991 as a manufacturer of metal closures for alcoholic beverage bottles and for glass jars. The company is the leader on the Polish market and a significant player in this sector in Europe. Over half of DGS’s profits come from exports to countries of the former Soviet Union and to the EU. In 2004 the company achieved revenues of PLN 215 million (€54 million), exceeding the previous year’s results by 16%.

“DGS is a large and profitable company with an excellent management board and great prospects for the future. It is a good example of a Polish company that has achieved a significant position in Europe despite modest beginnings. We are very pleased with this investment and want to take part in DGS’s development and its further expansion in CEE markets and in the EU,” said Michał Rusiecki, a partner at Enterprise Investors, who is responsible for this investment.

Enterprise Investors is the largest private equity firm in Central and Eastern Europe. Active since 1990, it is the investment manager for five funds with $1.1 billion under management. The funds managed by Enterprise Investors have invested and committed more than $800 million in nearly 100 businesses in Poland and the CEE region.

Enterprise Investors has made many significant leverage buyout transactions, including a $12 million acquisition of 100% of Nomi in December 2003, 50% of which was financed with bank debt, as well as the €26 million buyout of 75% of Harper Hygienics in June 2004, where 32% of the transaction was financed by banks.