Interview with Georg Gayer

on the acquisition of American mail order company Hubert
(2000)

Question: Unlike many of its midmarket competitors, TAKKT recognized the challenges posed by globalisation and internationalisation back in the 1980s. Now the group is in the process of strengthening its position in North America. What role does the American mail order market play in TAKKT AG's concept?

Gayer: The American mail order market is already highly developed - in terms of both companies and customers. The Americans are accustomed to service-centered shopping and the mail order trade enjoys a high level of acceptance. Compared with Europe - excluding the German market - this fact is of prime importance.

Question: Could you give us a brief outline of the latest TAKKT subsidiary?

Gayer: Hubert is the US market leader in a segment with a total volume of some US$ 7.5 billion. The company engages exclusively in B2B mail order business for supplies and equipment for the retail foodstuffs trade and also for the catering sector, i.e. canteens, restaurants and hotels. We are convinced that the mail order sales and marketing channel will make more and more inroads into this market. After all, annual growth rates over the past five years have been around 7.0 percent. By comparison, the market as a whole has been expanding at an annual rate of 5 percent. Hubert is a family firm established by German immigrants in 1946. It has its headquarters in Harrison, Ohio. The company pursues the same business strategies as ourselves. Hubert is an all-round vendor of equipment on a nationwide scale. It facilitates purchasing and offers its customers outstanding service. For example, 95 percent of goods are delivered from its central warehouses within 24 hours.

Question: What are TAKKT's strategic intentions with the takeover of Hubert?

Gayer: The most important motivation in acquiring the company has been to open up a new group of customers. Up until now, the offerings of our K + K America subsidiary have mainly focused on the needs of business and industry. It is therefore a strategically important step for us to add the service sector to our customer base. Like the other firms in the K + K America division, Hubert offers a highly diversified range of products. Altogether, the number of products available to customers in the Fulfillment Service is in the region of 68,000. This enables us to offer our clients solutions packages: Business Equipment Solutions. The product portfolio concept plays a key role in our operations. TAKKT has always made every effort to remain as independent as possible - not least in the interests of its shareholders. Independent in terms of customers and suppliers and also independent in terms of economic cycles on the individual regional markets. We are intent on freeing ourselves from the restrictions of national economic cycles by ensuring a higher degree of diversification at both regional and product levels.

Question: Do you see any possible synergy effects between Hubert and the existing TAKKT companies in North America?

Gayer: Yes, especially in the field of address marketing, in certain areas of purchasing, in catalogue production and of course in logistics. As already mentioned, our principal objective in acquiring Hubert was not to achieve synergy effects but to increase our customer base in the service sector and to expand our range of products.

Question: How will TAKKT be financing this acquisition?

Gayer: We have decided to finance the acquisition of Hubert entirely through borrowings. We consider this to be this best policy because K + K America and Hubert have high, stable cash flow rates, guaranteeing repayment of the borrowings within a reasonable time. Even after the acquisition, TAKKT - with an equity ratio of more than 20 percent - will have a sound balance sheet structure and adequate credit lines to finance further projects of this type.

Question: In 2000, TAKKT has been expanding at a phenomenal rate - take, for example, the establishment of Topdeq France, of KWESTO in Prague, the expansion of business activities to include Mexico, etc. Is this not placing undue strain on TAKKT's corporate organisation?

Gayer: By no means. The new Topdeq venture in France is managed primarily by Topdeq; the establishment of KWESTO involves KAISER + KRAFT EUROPA. The Hubert acquisition is of course a huge challenge for K + K America. The integration of Conney is almost successfully completed. There is therefore sufficient free capacity. Basically, the focus is on expansion in all three divisions. We had promised to step up the pace and that's our strategy at the present time. Whereas over the past fifteen years we have recorded an average of either one newly established or one newly acquired company per year, this year we can already report two newly founded companies and one takeover. It is part of TAKKT's core competence to roll out a system business successfully. New launches and successful takeovers underscore our ability to apply our 'multipliable' system business speedily to new markets, market segments or regions.

Question: Ordering per mouse click is now much more widespread in the United States than in Europe, especially in the B2B sector. How well equipped is Hubert for virtual trading?

Gayer: All the products in the catalogue are available in the internet - with photos - for those who wish to order. In addition, an innovative website with numerous interactive capabilities supports Hubert's e-commerce activities. With C&H and Hubert in the United States, we are well positioned with the latest technology. We are ideally placed to succeed in this competitive market.

Contact persons:

Georg Gayer
Tel. 07 11.50 01-239

Dr. Felix A. Zimmermann
Tel. 07 11.50 01-861