Case Study



June 2011 – April 2017




Mid Europa’s stewardship and support over the years helped to uniquely position Zabka to capitalise on the market opportunity in a sustainably profitable manner.

- Tomasz Suchanski, CEO, Zabka

Growth of the network
Sales growth
EBITDA growth

Shopping for growth

Management ambition combined with funding and expertise created Poland’s largest retail transaction


A nearly six-year partnership saw Zabka’s number of sites double, revenues triple and profits nearly quadruple – all before becoming the largest retail deal and private equity sale in Poland in 2017. 


In fact the story began longer than six years prior. MidEuropa’s penchant for building relationships ahead of a potential deal meant the firm was in discussions with Zabka’s leadership team back in 2007, and in the years that followed, MidEuropa kept a keen eye on the retailer’s growth journey whilst mapping the market for other enticing retail opportunities. In 2010, having conducted a comprehensive review of over two dozen potential investments in the consumer and retail sectors in Central Europe, MidEuropa had a good perspective and a set of benchmarks. This thorough diligence gave MidEuropa strong conviction that convenience would become a strong trend in Polish retail, even as other market participants were focusing on discounters. Within this contrarian view, MidEuropa identified Zabka as the best placed retailer to lead an ambitious consolidation of a fragmented segment in Poland. 

Zabka grew increasingly confident of this partnership too, which was crucial given they were then in advanced talks with grocery behemoth Tesco, which had already bought the Czech business of Zabka. Fortunately, a shared vision for growth on the back of the longstanding relationship and Mid Europa’s proven experience in developing other Polish businesses meant Zabka chose to work with MidEuropa. A sizeable deal worth nearly €400m was signed in mid-2011 for what was already a leading brand, with its 2,300 stores in Polish cities and high-traffic areas then generating €550m in revenues. 


Roll-out and consolidation

The fresh partnership wasted no time in accelerating the retailer’s growth. Zabka was already growing at an impressive rate of 200-250 openings per year, but a keen focus was placed on doubling this. This was achieved through an organic roll-out regionally as well as acquisitions, with management drawing on MidEuropa’s experience in this latter area to assess over 100 prospective targets. The appeal of consolidation was clear: the top five retailers in Zabka’s space commanded a combined 28% of the total market at the time of the 2011 deal. Ultimately seven regional players were acquired between then and 2017, adding more than 200 stores and €75m of annual sales to Zabka’s portfolio. 

An additional equity investment of €60m was made to accelerate new openings and support further growth by investing into warehouses, logistics, marketing and IT.


Operational improvement

To ensure these acquisitions and the roll-out were a success, it was important to invest in integrated IT systems. This was funded and directed by MidEuropa and helped bring logistics in-house and optimise distribution processes through a new enterprise resource planning system. 

Management also worked hard to improve the overall shopping experience and enhance customer perception of the brand: Zabka’s product mix and pricing were tweaked to prioritise fresh and grocery items, stores were refurbished to make them more appealing, and the logo was updated to be fresher and more inviting. Overall Zabka was opening 500-600 stores per year by the end of their time with MidEuropa. 

While the growth was a success, it wasn’t without hiccups. In the middle of the investment period, the heavy investments into roll-out acceleration, logistics and marketing caused profitability to drop, and EBITDA to remain flat for more than a year in 2014. Owing to its strong conviction for the sector and Zabka’s strength within it, MidEuropa remained supportive and by 2016/2017, margins were growing above market levels. 

By 2017, Zabka was operating 4,500 sites across Poland, serving 2 million customers per day. The growth was the result of thoughtful expansion and careful in-house enhancements, both underpinned by MidEuropa’s experience in these growth areas as well as the retail market. 

With further still to go, in 2017 CVC bought Zabka to fund its next stage of growth. The landmark transaction was the largest ever food retail deal and the largest private equity exit in Poland at the time, and remains one of the region’s largest private equity exits. The successful partnership drew on three of MidEuropa’s core themes (buy-and-build, accelerating regional expansion and operational excellence) in one of its four focus sectors, consumer.