Published: 2020-11-24 11:18:59 CET
Flügger group A/S
Inside information
2020/26 - Flügger gains majority stake in Eastern European paint group
24.11.2020 11:18:59 CET | Flügger group A/S | Inside information

Flügger group A/S entered into an agreement to invest in Eskaro group
70% of the shares in Eskaro Group AB, an international paint group
operations in Ukraine, Russia, Belarus, Estonia, Latvia and Finland. The
employs around 1,100 people and generates annual revenues of
approximately DKK
420 million. The acquisition is awaiting approval by the
authorities. Full approval is expected to be granted in early

With the acquisition of 70% of the shares in Eskaro Group AB, Flügger
another Eastern European player to its activities. A year ago, Flügger
bought a
majority stake in the Polish paint group Unicell, and with the
acquisition of a
majority stake in Eskaro, the Flügger group is thus expanding
its presence
towards the east and entering new markets. Eskaro’s activities
cover Ukraine,
Russia, Belarus, Estonia, Latvia and Finland. There, the group
operates six
factories that produce more than 30 million litres of paint,
varnish and primer
a year. The production facilities include a new and modern
factory in Ukraine.
Most of Eskaro’s products are sold to dealers, builders’
merchants and other

After the investment, Eskaro’s co-founder Igor
Chumakov will own 30% of Eskaro,
while Flügger group A/S will own 70%. Igor
Chumankov will be in charge of
Eskaro’s day-to-day operation and management and
will develop the company’s
short- and long-term business plans in close
cooperation with Flügger’s

Jimmi Mortensen, CEO of Flügger group
A/S, says:
“Eskaro is an extremely interesting company, which operates on
growth markets.
Eskaro has created a solid platform in Eastern Europe, which we
believe has
potential for further profitable growth. The company has grown by
15% annually
since 2016, and we expect to be able utilize significant synergies
Flügger and Eskaro over the coming years. With the acquisition of the
company Unicell in November 2019, we significantly strengthened our
position in
the Polish DIY market, and now we’re doing the same in large parts
of Eastern
Europe with the acquisition of Eskaro, which has a leading position
water-based decorative paints. The acquisition supports our strategy
Green, where we see further growth potential in Eastern Europe, and seek
expand Flügger group’s presence in Eastern Europe. Our financial targets
2023/24 are DKK +2.5 billion in revenues and EBIT of +8%, and with
acquisition of Eskaro, we’re close to achieving these.”

Igor Chumakov,
founder of Eskaro, says:
“We look forward to joining the Flügger group. As part
of Flügger group, we’ll
have the opportunity to exploit synergies – in
particular sales and solutions to
large builders’ merchant chains – but also in
the area of production and
purchase of raw materials. We look forward to
continuing our expansive growth
journey with the backing of a strong

Most of Eskaro’s revenue comes from sales via dealers and builders’
with Ukraine and Russia accounting for about two-thirds of the
revenue. In 2020,
Eskaro expects revenues of approximately DKK 420 million,
EBIT of DKK 27 million
(EBIT margin: 6.5%) and EBITDA of DKK 40 million (EBITDA
margin: 9.5%). 

Facts about Eskaro Group

 * Employs approximately 1,100
people in six countries
 * Produces approximately 30 million litres of products
 * Is ISO 9001 and ISO 14001 certified
 * Has operated in Finland
since 1975 and in the other five countries since the
 * Until 2007,
the six companies operated as separate entities, after which they
consolidated into the holding company Eskaro Group AB, which is
in Gothenburg, Sweden
 * Operates six factories in five countries (Ukraine,
Russia, Belarus, Estonia
   and Finland) as well as 15 distribution centres
from which goods are
   distributed for export etc.
 * The product portfolio is
wide-ranging. Paints make up about half of the
   group’s revenue,
primers/priming oil 10%, wood stains 5%, and other
   categories such as
varnish, glue, adhesives and sealants approximately 35%.

Facts about the
Flügger group A/S will after the investment own 70% of the shares
in Eskaro,
while 30% will be owned by the founder of Eskaro, Igor Chumakov.
Eskaro will
continue to operate as an independent entity in Flügger group A/S.
closing, Igor Chumakov will continue as CEO of Eskaro.

In addition:

The transaction will put Eskaro’s value at DKK 350 million on a debt-free
 * Flügger pays a total consideration of DKK 208 million for a 70% share
   is partly reached by purchase of shares and partly by capital

 * The transaction costs relating to the deal are expected to total

  approximately DKK 8 million.
 * Eskaro will continue to operate as an
independent business entity with Igor
   Chumakov in charge of day-to-day
operations and management.
 * The transaction is awaiting approval from several
competition authorities.
   Full approval is expected in early 2021.
 * From
the time of closing, when the authorities have granted approval, the
transaction will be fully included in the Flügger group’s accounts in
accordance with current accounting standards.

Part of the Going Green
The acquisition of Eskaro is part of Flügger’s strategy of growth
acquisitions with a focus on Eastern Europe. The acquisition will give
access to new emerging markets and a solid starting point within the
DIY sector
in the six countries in which Eskaro operates.

Impact on the
2020/21 financial year
The acquisition of Eskaro is expected to have a positive
effect on Flügger group
A/S’s revenue and earnings in the 2020/21 financial
year, but the scope of the
effect depends on the timing of the authorities’
final approval of the

If Eskaro had been part of Flügger group
A/S throughout the 2020/21 financial
year, the total revenue would have been
just under DKK 2.5 billion, with an EBIT
margin of 9-10%. 

The financial
outlook will be updated at the time of final approval of the


Flügger group A/S


 * Download announcement as PDF.pdf


Download announcement as PDF.pdf