Entry into the mail order business for food service equipment and supply with USD 88 million in sales

TAKKT AG takes over US mail order supplier Hubert

TAKKT AG, the leading business-to-business mail order supplier for office, business and warehouse equipment in 18 European countries and North America, is taking over US market leader Hubert, a mail order supplier for equipment and supplies for food service retailers and restaurants. With this acquisition, the Stuttgart-based group also expands its customer base in the service provider industry. With its 175,000 customers, Hubert generates sales of USD 88 million. In the future, the highly profitable US company will be managed as a subsidiary of K + K America. The takeover is planned for mid-October. The contract partners have agreed not to disclose the purchase price.

"For us, the acquisition of Hubert is an important step in further increasing our clientele in the service industry," Georg Gayer, chairman of the management board of TAKKT AG, said about the company's latest deal. "Hubert is an excellent match for us. Like the other companies in the group, Hubert is a pure and multipliable B2B catalogue mail order business. In this respect, we consider the acquisition a good foundation for expanding Hubert's business on an international scale, since products and customers are identical in certain segments." Hubert president Bart Kohler also sees a great opportunity in the company's takeover by TAKKT AG: This step opens up excellent growth opportunities for us. It will also result in synergy effects in catalogue and address management or purchasing advantages for parts of our product range. Furthermore, we can use TAKKT's know-how, i.e. duplicating the mail order business in other countries."

TAKKT AG will exclusively use outside capital to finance this purchase. CFO Zimmermann: "We believe this to be the right decision as K + K America and Hubert both generate a high and stable cash flow which will enable us to pay back our debt within a reasonable time frame. The EBITDA margin of Hubert is significantly above the TAKKT average of 11 percent. Even after the acquisition, TAKKT will have an equity ratio of more than 20 percent, a solid balance sheet structure and adequate credit lines in order to finance further projects."

Top position in the US market
With the acquisition of Hubert, the turnover of TAKKT division K + K America increases by almost 40 percent. But even without the new acquisition, this division with its subsidiaries C&H Distributors, Avenue Industrial Supply and Conney Safety Products is the leading B2B mail order supplier in North America today. Up until now, the product range consisted of more than 45,000 articles from the transport, warehousing, business, office, work safety and packaging sectors. In 1999, the division had sales of EUR 228 million, representing approx. 36 percent of TAKKT's overall sales. "For us, the integration of Hubert into K + K America is an important step forward," said C&H president Dave Stark. "By expanding our existing product range horizontally, we have excellent prospects for the further expansion of our position as market leader."

More than 150,000 new TAKKT customers
TAKKT's youngest company is the market leader in the mail order business for equipment and supplies for food service retailers and for the food preparation business, e.g. restaurants, hotels or cafeterias. For the financial year 2000 (ended 31 July 2000), the company expects sales of about USD 88 million. With an average annual growth of seven percent per year during the past five years, Hubert grew faster than the market itself. Growth for the entire industry was about five percent per year.

Based in Harrison, Ohio, Hubert was established in 1946. The company's product range consists of approx. 23,000 articles, 90 percent of which are permanently in stock. "Our service promise that the ordered merchandise is sent from our central warehouse to our customers within 24 hours applies to 95 percent of our product range," Kohler said. While the 840-page catalogue serves as Huberts' most important advertising medium, sales support also includes mailings to their 175,000 customers. At the same time, the company is excellently prepared for e-commerce: The complete product range can be ordered over the Internet. Currently, Hubert has more than 320 employees.

High-turnover food service market in the United States
The food service equipment & supplies market includes equipment and Hubert articles for all businesses offering prepared foods and beverages to their patrons. The overall market volume is approx. USD 7.5 billion. With about 2,700 suppliers, this market is strongly fragmented. Competitors include the most important food wholesalers which also offer restaurant equipment besides their main product range and numerous small regional companies focusing on individual product segments. "I am convinced that we will also be very successful in this market," TAKKT chairman Gayer said with great optimism. "We believe that the mail order segment will gain market share at the expense of other distribution channels such as wholesale and retail in this segment as well."

Stuttgart, 25 September 2000

Contacts:

Georg Gayer
Tel. 07 11.50 01-239

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