Information on the Target

The Probos Group, headquartered in Porto, Portugal, is recognized as the third-largest global manufacturer of thermoplastic edgeband solutions, specializing in PVC and ABS plastic edgebandings. The company employs approximately 470 staff members and generated sales of €66.5 million in 2016. An impressive 90% of its sales come from exports, with active sales operations in over 50 countries. Probos has successfully established a significant international presence, particularly in emerging markets, bolstered by production facilities in Portugal and Brazil, in addition to direct sales in key markets such as the UK, Germany, the US, and Mexico.

Industry Overview in Portugal

The surface materials and plastic manufacturing industry in Portugal has shown resilience and growth potential over the past few years. As a nation with a rich history in manufacturing, Portugal has increasingly focused on producing high-quality goods while adapting to global market demands. The country’s strategic location and access to European and international markets make it an attractive hub for manufacturers looking to export their products.

In recent years, the industry has witnessed advances in technology, allowing manufacturers to improve product quality and operational efficiencies. This evolution is complemented by a skilled workforce and innovative practices, which have further solidified Portugal's reputation as a reliable source of attractive manufactured goods.

Moreover, the Portuguese government has been supportive of initiatives that promote industrial growth, offering incentives for foreign investments and fostering a favorable business environment. This has led to increased competitiveness among local companies, encouraging them to expand their reach in both traditional and emerging markets.

The demand for decorative surface materials, like those produced by Probos, has been driven by growth in sectors such as construction and interior design, both in domestic and international markets. With rising consumer preference for quality and customization, the market outlook for companies within this industry remains optimistic.

The Rationale Behind the Deal

The acquisition of Probos Group by Surteco SE is fundamentally underpinned by the latter's strategy to expand its international footprint and diversify its product offerings. Given Probos’s established market presence, particularly in South and Central America, the acquisition represents a significant opportunity for Surteco to tap into new markets while bolstering its existing product lines.

The successful track record of the Probos management team, coupled with principles of solid operational improvement, creates a robust foundation for future growth. The sale, valued at €99 million, is viewed as a strategically sound investment, with expectations of a strong return due to Probos's existing market strengths and operational capabilities.

Information about the Investor

Surteco SE, the industrial buyer of the Probos Group, is a publicly traded German company recognized as one of the global leaders in the manufacture of decorative surface materials and technical plastic extrusions. As of December 31, 2016, Surteco reported sales of €639.8 million and an EBITDA of €74.3 million, employing approximately 2,800 people.

The company’s established position in the market is complemented by its dedication to innovation and sustainability, ensuring it remains at the forefront of industry developments. Surteco’s strategic initiatives focus on expanding its market share globally, making the acquisition of Probos a key milestone in its growth strategy.

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The acquisition of Probos Group by Surteco SE represents a compelling investment opportunity that aligns with market trends and growth potential in the industry. The significant international presence that Probos boasts, particularly in emerging markets, positions Surteco well to leverage this existing network and expand its reach further, capitalizing on growing demand for quality surface materials.

The strategic focus of Surteco on profitable companies like Probos is likely to yield benefits, as the latter has demonstrated strong performance and a commitment to operational excellence. The insightful management team at Probos, which has proven its ability to thrive in competitive markets, should facilitate a smooth transition and ongoing business development post-acquisition.

Furthermore, the synergy between the products and markets of both companies bodes well for future growth prospects. By integrating Probos’s operations, Surteco can enhance its manufacturing capabilities while achieving economies of scale. The deal, therefore, not only promises to enhance Surteco's portfolio but also illustrates a broader commitment to innovation and market leadership.

Overall, considering the established market position of Probos, its international sales capabilities, and the strategic vision of Surteco, this acquisition is poised to be a sound growth strategy that could translate into favorable financial performance and market expansion for both entities in the years to come.

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