Ergis

Press Release

23 January 2007, 13:28

The Merger of Eurofilms SA and ERGIS SA and formation of one of the largest plastics processing companies in Central and Eastern Europe

Eurofilms S.A., a leading Polish manufacturer of stretch and heat-shrinkable PVC film and distributor of BOPP film is to merge with its majority shareholder ERGIS S.A., the largest Polish manufacturer of PVC products and an industry leader in Central and Eastern Europe, whose main products are film, granulated products, wallpaper, and panels.

Before the merger takes place, ERGIS S.A. will take over 100% of the shares in BAAD from Nowy Sącz, a manufacturer of flexible packaging with flexographic overprinting. This will lead to one of the largest companies in the Central and Eastern European plastics processing industry, with total revenue of PLN 330 million, being listed on the Warsaw Stock Exchange. 

Key information:

  • The Management and Supervisory Boards of Eurofilms S.A. have decided to begin work
    leading up to a merger with ERGIS;
  • Before the merger of Eurofilms S.A. and ERGIS S.A. is carried out, ERGIS will take over BAAD, thus expanding its production profile to include flexible packaging with flexographic overprinting.
  • Eurofilms has also decided to develop a new product line: PET tapes, which are used for packing large and medium-sized loads;
  • The company created by the merger will be listed on the Warsaw Stock Exchange under the name ERGIS - EUROFILMS S.A.;
  • The post-merger development strategy of Eurofilms S.A. and ERGIS S.A. (excluding BAAD) will aim to strengthen their position as a market leader in film production and their position as an industry leader in plastics processing in Central and Eastern Europe;
  • Further development of ERGIS - EUROFILMS S.A. will be pursued via organic growth, investments in new production lines (including products which are not currently part of the group’s range) and further acquisitions of companies in the plastics processing and packaging production industry.

The merger of Eurofilms S.A. and ERGIS S.A.
ERGIS S.A. is the largest shareholder in Eurofilms S.A. with a 52.67% share of its capital and votes. The merger of the two companies will be carried out by Eurofilms S.A. taking over ERGIS in exchange for shares in Eurofilms from a new share issue directed at ERGIS shareholders. The parity of exchange will be established over the next 3 months. The purpose of the merger is to create an entity which will play a leading role in the plastics processing market in Central and Eastern Europe. The newly-formed company will still be listed on the Warsaw Stock Exchange and its CEO will be Tadeusz Nowicki, the current CEO of ERGIS S.A.


“We mentioned the possibility of introducing ERGIS to the Warsaw Stock Exchange during Eurofilms’ debut last year. We came to the conclusion that we would achieve optimum synergy and business development by merging the two companies. In this way the entire ERGIS group will be listed on the stock exchange. Stock exchange investors will therefore be able to take part in and benefit from the effects of our development strategy, which is aimed at securing a leading position in the plastics processing market in the Central European region,” says Tadeusz Nowicki, the President of the Management Board of both ERGIS S.A. and Eurofilms S.A.

“I am sure that the merger of Eurofilms and ERGIS will bring about a marked increase in value for Eurofilms shareholders. The newly-formed entity will have a strong market position and therefore great potential to develop in a market which is likely to enjoy substantial growth in the next few years”Grzegorz Kędzierski, a Member of the Management Board of Eurofilms S.A. 

The takeover of BAAD by ERGIS S.A.
Before the merger of Eurofilms S.A. and ERGIS S.A., ERGIS will take over Drukarnia BAAD Sp. z o.o. For this purpose ERGIS S.A. will perform a new share issue directed at the present shareholders of Drukarnia BAAD, which its current shareholders will be excluded from acquiring. BAAD will thus become a 100% subsidiary of ERGIS S.A. As a result of this transaction ERGIS S.A., as the leader of the Polish plastics processing industry, intends to enter the market for flexible packaging and build a strong position within that market. The management boards of both companies believe that the flexible packaging market is one of the most dynamic segments of the packaging market, showing strong growth and great potential.

Eurofilms’ investment in a new product line
Eurofilms has decided to develop a new product line: PET tapes for packing large and medium-sized loads. The company will invest PLN 13.5 million investment in the new production line, which will have target production capacity of 4,800 tonnes per year.
Additional information is available from:

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Information about Eurofilms S.A.
Eurofilms S.A. is the second largest Polish manufacturer of stretch film (used for wrapping loads on pallets, among other things), a manufacturer of heat-shrinkable PVC film (used for packing food products, among other things), and a distributor of BOPP polypropylene film (mainly used for manufacturing packaging).

In 2005 the company generated sales revenue of almost PLN 100 million and net profits in excess of PLN 6 million, compared to PLN 93 million and PLN 4 million respectively in the first three quarters of 2006. The production capacity of the company is currently 27,000 tonnes of stretch film a year and 1,400 tonnes of heat-shrinkable film a year. Eurofilms employs more than 100 people. Additional information about the company is available at www.eurofilms.eu


Information about ERGIS S.A.
ERGIS S.A. is the largest manufacturer of PVC products in the Polish market and an industry leader in Central and Eastern Europe. Its main products are: film, PVC granulated products, wallpaper and panels. The company’s product range includes film which is permanently laminated with another type of film, paper, unwoven fabric, or cloth etc., extruded film (knurled), and multi-coloured printed film (up to five colours). Sales revenue for the Ergis Group (excluding Eurofilms) is forecast to reach around PLN 180 million in 2006, with net profit exceeding PLN 7 million. The main shareholder in ERGIS S.A. (the holder of a 100% of its shares) is the investment company Finergis Investments Ltd., which is controlled by the private equity investment fund DBG Eastern Europe II LP. Additional information about the company is available at www.ergis.eu

Information about Drukarnia BAAD Sp. z o.o.
BAAD is mainly a manufacturer of flexible packaging with flexographic overprinting. The company is also involved in offset printing, though to a much smaller degree. In 2005, BAAD generated revenue of PLN 30.65 million with net profit in excess of PLN 1.7 million. Its net sales revenue in 2006 exceeded PLN 34 million, with forecast EBITDA of almost PLN 4.8 million and net profit of around PLN 1.4 million. BAAD’s shareholders are natural persons. Additional information about the company is available at www.baad.com.pl