Avallon MBO FUND II in cooperation with a Management Group is investing in the hygiene sector market leader, the owner of the VELVET brand

The Avallon private equity MBO FUND from Lodz, which specializes in management buyout transactions in the Polish market, has performed its first investment from the new fund set up in December last year, with the Management Group taking over 100% of the shares of Kimberly-Clark Sp. z o.o. – owner of the leading Polish tissue and hygiene brands: VELVET, Szast Prast and A’psik.

Avallon carried out the MBO (Management Buy Out) transaction, in close cooperation with the Management Group, led by Arthur Pielak (Country Manager) and Marek Ściążko (Mill Manager), and signed a share purchase agreement for the Klucze plant from the multinational Kimberly-Clark on 25 March 2013. The strategic decision to sell the Polish arm of the company was made in October 2012 as a result of review activities in the area of consumer goods in Europe.

Subjects of the transaction include the brands: Velvet, Szast Prast and A’psik, which all hold leading positions in the Polish market, and also the modern manufacturing facility in Klucze. Following the acquisition, the Company plans to develop its flagship brand – VELVET and further strengthen its position in the Polish hygiene market. The new strategy also involves expanding the VELVET range and entering new export markets. The Fund will be actively analyzing acquisition opportunities to strengthen its market position in Central and Eastern Europe.

The plant in Klucze has an impressive history spanning more than a hundred years and was a listed company before World War II.

The agreement provides for both a smooth transition period of ownership, as well as the maintenance of a good relationship with Kimberly-Clark based on distribution agreement for Poland.

Przejście własności udziałów nastąpi po uzyskaniu zgody prezesa UOKiK i powinno nastąpić najpóźniej w III kwartale 2013 roku. The transfer of shares will take place after obtaining the consent of the President of the Office of Competition and Consumer Protection (UOKiK) and is estimated to be completed by the third quarter of 2013.

The Fund was supported in the transaction by the law firm GESSEL and by KPMG.

Artur Pielak, Board member – Country Manager
“As a global company and market leader, Kimberly-Clark has contributed both the know-how and market standards to the Company. The strategic decision by the company has created a unique opportunity to implement the acquisition of the company’s operations in Poland. It has been a period of very hard, intensive work in cooperation with Avallon to meet the demanding schedule of the transaction. We are pleased that we have managed to arrange continued good business relations with Kimberly-Clark regarding ranges not produced in Poland”.

Marek Ściążko, Board member – Plant Manager

“The plant meets the highest standards of production and has a long tradition in the field of papermaking. We have a good development strategy and a shared vision with Avallon for further development. The transaction is very important for the local community as the Company is the only major plant in Klucze”.

Tomasz Stamirowski, Managing Partner Avallon
“We are delighted that, as financial investor, we can together with the Management Group continue to build on the history of the plant in Klucze which spans more than 100 years. Our decision to invest was based on several factors, most important of them are the presence of motivated managers, the high quality organizational culture of the Company and the strong market position of the acquired brands. The Company is a leader on the Polish hygiene market. We support the ambitious expansion plans of the Company and do not rule out further acquisitions in the sector”.

Kimberly-Clark Sp. z o.o. – The beginnings of the paper mill in Klucze date back to 1897. In the first years of its activity, it was manufacturing paper for printing and writing. In 1976 the Klucze plant became the first in Poland to produce hygienic tissue paper pulp – an intermediate for the production of hygiene products (tissues, napkins, toilet paper). Since then, the Klucze plant has been one of the country’s largest manufacturers of these products. The Velvet brand was launched in Poland in the mid-1990s and has since been a leading brand in the hygiene sector.

Avallon MBO FUND II – Kimberly-Clark Sp. z o.o. is the first investment of the new Avallon fund, created in December 2012, specializing in transactions carried out together with managers. Avallon is a pioneer in management buyouts in Poland and has been working in this area since 2001. Investors in the fund are international financial institutions including the European Bank for Reconstruction and Development and funds managed by the Swiss company Akina Partners.
The Fund invests in various sectors, mainly in companies with a turnover of between 50 and 250 million zlotys.