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Flamingo International has signed on 11th of January 2006, with Flanco Holding, the agreement for the acquisition of Flanco International SRL, one of the most important retailers of consumer electronics and white goods in Romania. The total transaction value will amount to approximately € 37 M. The Flamingo Group will thus become the second largest Romanian retailer of IT products, consumer electronics and white goods in terms of sales.

„We have closed this deal because size matters on this market and we want to further develop our company, rapidly and effectively. By joining forces with Flanco, we now become no.1 on the retail market in terms of the number of stores and no. 2 in terms of sales volumes” said Dragos Cinca, President of Flamingo International. The deal will be done in cash. Flamingo will finance the acquisition through an issue of 316.9 million new shares at a price per share of RON 0.4370. The issue will address the existing Flamingo shareholders, who will have preference rights. The preference rights will be traded on the BSE. Flanco Holding intends to acquire preference rights and subscribe up to two thirds of the new share issue. The transaction will be subject to approval by the Flamingo General Shareholders’ Meeting and The Competition Council.

„Following the closing of this transaction, we anticipate that the Flamingo group shall accelerate growth and increase profitability in the context of an increasingly competitive retail market. The acquisition of Flanco brings to market a retail group with an expected turnover in excess of € 200 M in the first year after the closing of the transaction. We expect this transaction to result in substantial reductions in operating costs, especially in the purchases of IT and consumer electronics, but also in other areas such as marketing, distribution and SG&A”, stated Dragos Cinca.

The group that results out of this transaction will have 199 stores all over the country and a strong presence in the segment of medium-area shops (150-300 sqm). The company shall diversify, via a safer route, into the segment of large-area shops 2 to 3 years earlier than anticipated at the moment of the Flamingo’s IPO. „We expect that the combination of the three major product portfolios (IT, consumer electronics and white goods) will generate the appropriate client numbers for the profitable operation of large area stores (2000-5000 sqm). For the next 12-18 months, Flamingo’s expansion strategy shall focus on the development of 10 new large-surface locations under the Flanco World brand. After closing the deal, both Flamingo and Flanco brands will be kept as such”, mentioned Dragos Cinca.

Shareholders of Flanco are Oresa Ventures, DBG Eastern Europe II LP and Florin Andronescu.

DBG Eastern Europe’s second Central and Eastern European – focused private equity fund has completed its first investment.

DBG with Polish managers Tadeusz Nowicki and Marek Górski, through a holding vehicle Finergis, have acquired Ergis S.A. shares from several National Investment Funds and placed an offer to buy the remaining shares from the Polish State Treasury.

Ergis S.A. that had participated in the mass privatization program since 1994 is the only Polish manufacturer of pharmaceutical foils and of wallcoverings and is the leading producer of PVC isolation foils, packaging and office foils and of construction panels in Eastern Central Europe. Following several mergers, take-overs and development investments that took place in the years 1998-2001 sales of Ergis Group have more than doubled to reach over € 50 M in the current year.

DBG Eastern Europe II LP is the successor fund to the highly successful DBG Osteuropa-Holding GmbH that had been investing in Poland, Czech Republic, Slovakia and in Hungary from 1997.

DBG Eastern Europe is focused on later stage investments. Ergis follows DBG’s earlier investments financing management buy outs of Czech on Line and Hungarocamion.

„We believe that management buy outs of Polish industrial companies will be interesting for private equity funds in the next few years. Co-operation with Ergis management will allow us to benefit from expected development of the Company in result of Polish accession to European Union and from its intensive modernization program implemented in the last few years.” said Jacek Korpala, managing director of DBG Eastern Europe.

„I am confident that the buy out worked out by DBG and the managers will be a strong basis for long term development of the Ergis Group and will be an example to follow by other Polish middle size industrial groups.” said Tadeusz Nowicki, the CEO of Ergis S.A.

DBG Eastern Europe’s second Central and Eastern European-focused private equity fund has completed a first closing at € 67 M. The fund’s second close will be completed later in the year, with targeted total commitments of € 80 M. DBG Eastern Europe II LP is the successor fund to the highly successful DBG Osteuropa-Holding GmbH, which has already returned nearly four times its original investor commitments. The first close of DBG Eastern Europe II LP has been completed with the unanimous backing of the predecessor fund’s limited partners: Deutsche Bank, EBRD, Mitsubishi Corporation and DEG.

The Central and Eastern European-focused private equity firm was established in 1996 with the support of German middle market buy-out firm, Deutsche Beteiligungs AG. The firm’s partners will maintain their relationship with Deutsche Beteiligungs AG, while operating from an established network of offices in Budapest, Prague and Warsaw.

DBG Eastern Europe’s strategy remains consistent, with a focus on later stage investments such as expansion financing, management buy-outs and buy-ins and industry consolidation transactions. The fund will primarily target the core EU accession countries of Czech Republic, Hungary and Poland, with a secondary focus on Croatia, Slovakia, Slovenia, South Eastern Europe and the Baltic Republics.

The venture capital fund DBG Osteuropa- Holding has completed the sale of the Internet provider Czech On Line to the telecommunication operator Telekom Austria. Jaroslav Horák, Managing Director of DBG Eastern Europe, has informed about the transaction today.

„DBG Osteuropa- Holding signed the contract for sale of Czech On Line to Telekom Austria on April 12 of this year. The standard buyer’s audits and usual approval procedures by the anti-monopoly authorities in the Czech Republic and Austria had to be finalized before the transaction could be completed,” announced Jaroslav Horák.

The price paid for the largest domestic Internet provider has reached an impressive US$ 220 million or nearly CZK 8.5 billion. It has been so far the largest Internet related transaction in the Central / Eastern European region. The Czech Republic has thus proved to be one of the prominent European countries from the point of view of output and potentials of the ‘New Economy’. „We are glad to have made the investment in the Czech Republic. It has confirmed our view that Czech Republic has a great potential for valorization of investments into Internet business,” said Jaroslav Horák of DBG.

Czech On Line, operating under the name Video On Line, was established in 1995. It was acquired by DBG Osteuropa- Holding in August 1998. One year later it became the first Czech ISP to offer free Internet connection service under the name VOLny.cz. It was the very first business model of this kind implemented in a country where liberalization of telecommunications has not yet taken place. Czech On Line is currently the largest domestic Internet provider which, according to independent experts’ estimates, controls more than one third of the Czech market.

„We highly appreciate our collaboration with the DBG Fund. Since their acquisition of the company, Czech On Line has strengthened its position of provider of innovative Internet and telecommunication services and products. The successful introduction of free Internet access represented a milestone from the point of view of increased availability of Internet access for the Czech users,“ said Mariano Pireddu, Chief Executive Officer of Czech On Line.