Dusseldorf After the “marriage of the lions” there is a lot of rumbling in the joint company after a year. In October 2021, Georg Kofler and his Social Chain AG completely took over the company DS Produkte. Ralf Dümmel was one of two managing partners there. The two investors had met as jurors on the Vox founders’ show “The Lion’s Den”.
But their biggest joint deal turned out worse than hoped. High losses are forcing Social Chain AG to restructure. Now there are surprising personal consequences: Georg Kofler, previously chairman of the supervisory board and largest shareholder, will become CEO on January 1st. The company announced this in an ad hoc release on Tuesday evening.
The 65-year-old is taking the restructuring personally into his own hands. Kofler replaces Wanja Oberhof, who, as a co-founder, is one of his long-standing confidants and will in future lead the US business and M&A activities.
Ralf Dümmel, 55, is stepping down from his post as Director of Product, Sales and Purchasing at Social Chain AG and concentrating on the DS Group again – as the sole managing director. “My strengths lie in the direct operative business: rolling up my sleeves, finding products, driving innovations, organizing sales across all channels – that’s my life,” says a statement that is exclusively available to the Handelsblatt.
At the same time, Social Chain AG is massively cutting costs and reducing short-term debt. Through synergies, more efficient organization and “significant savings in personnel costs”, costs are to be reduced by 30 percent in the 2023 financial year. At the DS Group alone, around 30 out of 500 jobs will be lost, a spokeswoman confirmed in a report by the “Hamburger Abendblatt”.
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Most recently, Social Chain AG employed almost 1000 people. With these savings measures, the company is reacting to “the drastically changed market environment”. Kofler promised the shareholders that he would lead Social Chain AG into a “profitable and sustainable future”.
Share Social Chain AG: Price fell by almost 90 percent in one year
The combination of the two companies had been advertised by the “TV lions” as ideal: DS products from Stapelfeld near Hamburg have been developing and selling special offers through discounters since 1973. Founded in 2014, Social Chain AG sells various products from mattresses to nuts and cosmetics via social media, influencers and web shops. Industry experts also considered the merger to be strategically sensible. “Direct marketing to consumers via social media is becoming increasingly important,” said trade expert Gerrit Heinemann, professor at the Niederrhein University of Applied Sciences.
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Koflers Social Chain AG paid more than 220 million euros for DS products, 100 million in cash and the rest in shares. Kofler currently holds the majority of the shares with around 36 percent. The “lions’ wedding” initially excited investors and drove the share of Social Chain AG up by a third. When it was included in the Frankfurt Prime Standard a year ago, the price was 54 euros. The company was valued at 620 million euros.
Former media manager Kofler, who had already listed ProSieben and Premiere, had big plans: “The step to becoming a unicorn is not far away,” he told the Handelsblatt at the time. As early as 2023, sales should increase from 620 million euros in 2021 to over one billion euros. “In the next few years we want to work our way up to the MDax,” he said.
But since then, business and the stock market price have gone downhill. Social Chain AG recently had a market capitalization of only 92 million euros. The stock has lost almost 90 percent of its value within a year. The price recently languished below six euros.
Because the merged company made heavy losses. In the first half of the year, sales doubled to 224 million euros compared to the same period of the previous year as a result of the acquisition of the DS Group. However, the consolidated loss rose from 8.7 to 51.6 million euros.
Sale of subsidiaries unavoidable
Social Chain AG tried to restructure itself by selling subsidiaries. Ravensberger mattresses, production company DEF Media, online marketing specialist Bytepark and private label production of nut company Clasen will be sold, the company announced in August. Social Chain AG had already sold its majority stake in the online retailer Koro in the spring.
High liabilities now also made debt restructuring necessary. Kofler itself strengthens equity with 36 million euros. Overall, current financial liabilities were reduced from EUR 197 million to EUR 35 million through a credit line from the DS Group. The long-term liabilities are now at 233 million euros.
Increased raw material prices, disrupted supply chains and inflation complicate the business of Social Chain AG. Consumers keep their money together. Promotional goods often remain on the shelves – very different from the situation during the pandemic. The dealers are sitting on full camps.
Social Chain AG had already revised its sales forecast for 2022 downwards to 415 million euros in August. CFO Andreas Schneider announced at the time that the company would be profitable again in the fourth quarter.
It is unclear whether the two lions will appear together again in the next season of the TV founder show. Unlike Dümmel, according to a report in the “Bild” newspaper, Kofler should not be a juror. As head of Social Chain AG, he will also have a lot to do in the future.
More: The lion’s den: So many start-ups are already broke despite the deal