Hedge funds and Private Equity - PES

DT-Group
1. Company description
DT Group A/S imports wood and trades building materials (special wood products) and runs
chains of building markets. It provided building materials and tools etc to professionals and private
in Denmark and Sweden. Turn over is 2½ bn € and numbers of employed 8.000. DT Group
was in many years listened at the Copenhagen Stock Exchange under the name Det Danske
Trælastkompani (Danish Wood traders). The DT Group A/S was listened at the Copenhagen
Exchange
2. Economic and social effects
2.1 Private equity fund description
In 2003 the DT group was bought by the private equity group CVC Capital Partners (90%)
and a holding company formed by the management group in the DT Group A/S (10%). Price: 0,
9 bn €.
The profit of DT Group A/S has increased very must the last 3 years, thanks to the very positive
conjuncture in Denmark special for the housing and building industry.
When the company was listened, it usual declared a dividend at 10 – 15 mill € pr year, which
was a ratio of 30 % of the profit of the year, the company to times declared a special dividend
at 200 mill € two times (2004/05 and 2005/06). The holding companies used in the LBO used
the dividend to pay back the financing of LBO.
The increased dividend was financed by better cash flow of the company, which – among other
initiatives – pressed its supplier to give a longer credit.
2.2 Social effect
The numbers of employees have increased with 10%, but this is only because of acquisitions
of formerly private owed building markets.
The direct investment in property and equipment is lower than the yearly deprecations.
The effective tax rate of the profit of the company was decreased because of joint taxation with
the holding companies, which were the direct owners, and had taxable negative profit because
of interest of the financing of the LBO.
3. Exit of the private equity
In 2006 the CVC and the management team sold the DT-Group to the British building materials
provider Wolsely plc. for the price of 2 bn €.
Annex – 21 Case studies
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