The CHFr 1.25 billion (ecu 782 million) acquisition of Vsgele Group, announced in late November, is the largest deal ever completed by Schroder Ventures.
The family-owned Swiss clothing retailer has 360 shops in Switzerland, Austria and Germany, with annual sales of CHFr 950 million. A household name in Switzerland, Vsgele has sold non-fashion, value-for-money family clothing since the early 1950s. Friedrich Graf von der Groeben of Schroders & Partner in Frankfurt described the group as “one of the top performing retailers in Europe in its sector, with excellent growth opportunities, particularly in Germany’; he added that Schroder”s objective is to float Vsgele in due course.
An agreement with the family vendors precludes Schroder Ventures from revealing many details about the funding structure. Investing through its new regional vehicle, the Schroder Ventures European Fund, the group has taken an 85% holding in the newco; the family vendors have retained a 10% stake and management has acquired a 5% share of the equity. The deal was backed by Deutsche Morgan Grenfell and Union Bank of Switzerland, which provided both senior debt and mezzanine facilities.
Preceding the Vsgele deal by a few weeks was the first major deal from the Schroder European Venture Fund, the acquisition of Sirona Dental Systems, a division of Siemens. The price agreed was not disclosed, but market sources suggest it is around DM700 million. Completion is dependent on the approval of the German Cartel Office. Banking for the deal is being underwritten by SBC Warburg Dillon Read.
Sirona, which has a 14% share of the global market, is the world’s leading dental manufacturer and the only operation in the sector with a number of fully-owned dealerships. Since its establishment more than 100 years ago, Sirona has earned a worldwide reputation for technological leadership. Today, its product range and technologies are protected by over 900 patents and licenses. It employs around 2,700 people and has annual sales of the order of DM 900 million (GBP310 million).
Schroder Ventures partner Richard Winckles said Sirona is now beginning to benefit from a major restructuring programme launched three years ago and expects further gains in profitability as a result. He added “While Sirona is already the clear market leader in its field, we believe the company has identified some impressive future growth opportunities and has a clear strategy for tapping this potential.” Ultimately, Schroder Ventures intends to float Sirona Dental Systems in Frankfurt.