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.