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20 August 2009

Silverfleet Capital to buy Kalle for €212.5 Million. Deal is first investment from newly raised fund.

The resilience of the food sector to the economic downturn was one of the contributing factors behind Silverfleet Capital’s €212.5 million acquisition of Kalle the global manufacturer of artificial sausage casings and sponge cloths, from Montagu Private Equity, which was signed today; subject to anti trust approval. The deal is the first investment from Silverfleet Capital’s €665 million new fund and is one of the largest private equity deals agreed so far in 2009. Debt for the transaction was secured from a syndicate of banks led by the Bank of Ireland.

According to Guido May, partner of Silverfleet Capital, the European private equity house who led the deal: “The recession proof nature of the food sector has made it possible for us to secure new debt, with the banks more willing to finance leveraged buy-outs in this sector.”

Headquartered in Wiesbaden, Germany, Kalle is one of the top five global producers of artificial casings for sausages with very strong market positions in the viscose, textile and plastic product areas. The business has forecasted sales of €220 million and operates from 16 production sites in 10 countries. It has invested heavily in new product development and in establishing its own manufacturing facility in the USA, the world’s largest market for artificial casings.

“Kalle is the market leader in its segments and has strong technical skills based on its excellent research and development capability. We operate with high levels of productivity and offer a comprehensive portfolio of high quality products to our global customer base. This sets the company in a strong position to outperform the rest of the market. We look forward to working with Silverfleet Capital to further realise the potential of the business”, said Dr. Walter Niederstätter, CEO of Kalle.

According to Neil MacDougall, managing partner of Silverfleet Capital: “Another part of our rationale for acquiring Kalle is the opportunity to fuel growth through a buy and build strategy. We’ve identified several acquisition targets that would fit well with Kalle and we are excited about these potential expansion prospects.”

Kalle focuses on leadership through innovation and keeps its leadership positions through intellectual property, leading production know-how and innovation. The Company is the most innovative polymer and value adding casings supplier in the world with over 12,000 different products for a broad spectrum of applications, supplied to approximately 1,100 customers in over 80 countries.

The total sausage casings’ market size (natural and artificial) was estimated to be around €3.5bn in 2008. The market has grown from 2003-2008 by 3.1 per cent per annum and is expected to grow from 2008-2012 by 3.4 per cent per annum. In general the market for casings is divided into natural and artificial casings. Approximately 51 per cent of the total market value is attributable to artificial casings. This share is expected to increase to 54 per cent in 2012 and will further substitute the natural gut casings.