The deal sees Deutsche Beteiligungs AG (DBAG) and one of its investment funds, along with the current management, buy congatec Holdings from the founding shareholders.
DBAG confirmed it is investing €23m for a 20 percent stake, which values congatec Holdings at €115m ($136m), while the fund will own a majority stake in the company alongside DBAG. The company’s 2019 turnover was $126m (€106m).
Two-thirds of congatec's revenue coming from customers based in Europe, but congatec says it sees its share of sales with customers in the USA and Asia growing rapidly, and expects this trend to accelerate. The current CEO, Jason Carlson, is based in the US and is also chairman of the managemewnt board.
"In DBAG, we have found a strong partner for the further development of our company who is well versed in our customers' key end markets and brings financing and M&A experience - with DBAG and DBAG Fund VIII, we are well positioned to take advantage of these expanding market opportunities," said Carlson.
"We expect continued strong growth in digitization," said Dr. Rolf Scheffels, member of the DBAG Management Board. The Covid-19 pandemic has given a strong boost to the Internet of Things and Industry 4.0 which will further boost demand for embedded systems, he says. DBAG has previously invested in Swiss embedded technology Duagon that includes board supplier MEN.
"This experience has now paid off in the assessment of the investment opportunity," said Scheffels.
Structured as a management buyout (MBO), the DBAG Fund VIII, advised by DBAG, will acquire the majority of the shares from the founding shareholders, some of whom are also senior managers. congatec was founded in 2004 by 13 former employees of JUMPtec, which had merged with Kontron in 2002.
The founders looked at going public in an IPO in 2015 when the holding company was set up, and again last year. That was postponed to 2020. "We have received very strong engagement and positive feedback from