Target Information

Avallon MBO II has successfully acquired the Polish division of Kimberly-Clark, which includes the paper mill in Klucze and the Velvet brand products manufactured there. The newly formed entity will operate under the name Velvet CARE Sp. z o.o. All previous operations of the American company within Poland will be managed by this new entity.

The acquisition follows an agreement made on March 25, 2013, and was executed through a management buyout. The shareholders of Velvet CARE include the Avallon MBO FUND II, a specialized fund focused on management buyouts, along with the management team that previously oversaw the Polish division of Kimberly-Clark. This acquisition includes well-established brands in the Polish market, such as Velvet, Szast Prast, and A’psik, as well as the modern production facility located in Klucze.

Industry Overview

The consumer goods industry in Poland has been experiencing steady growth, driven by an increasing demand for high-quality personal care and hygiene products. The recovery following economic downturns has led to a rise in consumer spending, particularly in the categories where Kimberly-Clark operated. As consumers become more health-conscious, the demand for reliable and trusted brands has never been more critical.

In recent years, the Polish market has seen a surge in competition among local and international players in the hygiene and personal care segments. Companies are actively building their brand presence and competing on product innovation, quality, and price. This competitive landscape is expected to foster further growth in the industry, creating significant opportunities for well-positioned companies like Velvet CARE.

Moreover, the Eastern European market is characterized by its unique consumer preferences, which often differ from Western European standards. Companies that can adapt their products to align with local tastes and preferences are likely to gain a competitive edge. This includes not only product offerings but also effective marketing strategies that resonate with Polish consumers.

The facility in Klucze has a history of successful production, further bolstered by the brand’s recognition in the market. The focus on technological advancements and quality improvements is essential for maintaining a competitive position and driving future growth.

Rationale Behind the Deal

The rationale for the acquisition stems from Avallon MBO II's strategy to enhance its portfolio with strong and recognized brands within the Polish market. The deal not only enables the investor to gain control over a well-established production facility but also allows for the expansion and revitalization of the Velvet brand through new product categories and closer partnerships with clients.

Moreover, having a dedicated management team with vast experience in the industry ensures continuity and expertise in navigating future challenges. The management buyout emphasizes strong leadership with a proven track record, which is vital for the company’s future endeavors.

Information About the Investor

Avallon MBO FUND II is a private equity firm established in December 2012, specializing in management buyouts. The firm has a significant history in this field and is recognized as a pioneer in Poland’s management buyout market. Avallon has been active in this sector since 2001, facilitating numerous successful transactions in collaboration with management teams.

The fund focuses on investing in various industries, including companies with revenues ranging from 50 to 250 million PLN. Additionally, it has received investments from international financial institutions, including the European Bank for Reconstruction and Development and funds managed by Akina Partners. Notably, Avallon MBO FUND was recently awarded the title of Best Fund of 2012 for small and medium-sized funds.

View of Dealert

From an expert perspective, the acquisition of the Polish division of Kimberly-Clark by Avallon MBO II appears to be a strategically sound investment. The established brand presence of Velvet and its sister brands presents a robust foundation upon which to build. Furthermore, having a dedicated management team that previously led the operation ensures continuity while facilitating a seamless transition post-acquisition.

The alignment of the company’s strategy with emerging market trends such as health consciousness and brand loyalty sets a positive outlook for Velvet CARE's future performance. The planned investments in production technology and product innovation will position the company to effectively meet evolving consumer demands.

While the competitive landscape poses challenges, Velvet CARE's strong brand equity and its ability to adapt to local preferences will be essential for capitalizing on market opportunities. The ongoing partnership with Kimberly-Clark for distribution and licensing further enhances its market potential.

Overall, this deal could indeed prove to be a significant growth opportunity for Avallon MBO II, provided they effectively leverage the established strengths of the brands and continue to innovate within the sector.

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