Kitron acquires Danish EMS provider, expands geographic footprint
(2021-12-20) Kitron has entered into an agreement to acquire
Danish EMS company BB Electronics A/S, which has production
facilities in Denmark, China and the Czech Republic. The deal is
clearly earnings accretive and adds significant shareholder
value.
"BB Electronics gives us a solid position in one more Nordic
country and extends Kitron’s footprint in CEE and China. The
acquisition also provides a pathway to establishment in India. BB
Electronics has well-run and highly automated manufacturing
operations serving a loyal long-term customer base. Its position
within higher-complexity segments fits perfectly with Kitron's
strategy," said Peter Nilsson, President and CEO of Kitron.
“We're impressed with the track record of the BB team and look
forward to working together.We expect BB Electronics to continue
with very little change. BB CEO Carsten Christensen will join the
Kitron Group management, maintaining current responsibilities. We
expect the transaction to be immediately earnings accretive for
Kitron, while also supporting our growth strategy," said Mr.
Nilsson.
Founded in 1975, BB Electronics is a full-service EMS
(Electronics Manufacturing Services) provider based in Horsens,
Denmark. The group has revenues of about DKK 1,000 million in 2021
and about 750 employees and has over the past years grown
significantly, both organically and through M&A. The customer
base is concentrated within industry, telecom and medical.
"We believe the match with Kitron is excellent and provides an
even stronger platform for BB Electronics, including a North
American manufacturing presence, which is in strong demand from our
existing customer base. We look forward to executing on our growth
strategy under the Kitron umbrella," said Carsten Christensen, CEO
of BB Electronics.
"The European EMS industry is highly fragmented, and we're
convinced that we will be even stronger together as we leverage our
individual strengths to continue both companies’ track records of
profitable growth," added Mr. Nilsson.
Transaction details
- Kitron will acquire 100 percent of the shares of BB Electronics
A/S from BB Electronics Holding ApS, which is owned by external
investors as well as BB Electronics management for a total of DKK
600 million (approximately NOK 822 million), on a debt- and
cash-free (Enterprise Value) basis.
- The acquisition includes all operations and assets of BB
Electronics, inter alia in Denmark, the Czech Republic and
China.
- BB Electronics is highly complementary to Kitron, adding
operations in jurisdictions where Kitron currently has a limited
presence.
Key strategic benefits
- The acquisition will provide Kitron with a strategic
geographical expansion, establishing a presence and gateway in
Denmark, an additional Nordic country. Further, Kitron will have a
strengthened presence in CEE with a site in the Czech Republic, a
pathway to establishment in India and increased footprint and added
capacity and capabilities in China.
- The acquisition provides opportunities for synergies. Following
completion, Kitron expects to increase its competence and offering
within production automation and sees new opportunities for
efficiency improvements.
- Existing BB Electronics customers may benefit from Kitron's US
operations, providing a broader customer base for the combined
group.
- Valuable management resources will add to Kitron and profitable
contribution to Kitron is expected from day 1 following
completion.
- In summary, the acquisition is anticipated to be clearly
accretive to Kitron.
Financial details
- BB Electronics has estimated revenues of approximately DKK
1,000 million (approximately NOK 1,370 million) in 2021. Over the
same period, the company has an estimated operating profit (EBIT)
of approximately DKK 66 million (approximately NOK 90
million).
- Kitron has established a term loan facility with DNB Bank ASA,
has available revolving credit facilities and received binding
offers for debt financing of the acquisition. Kitron expects to
enter into agreements for relevant debt financing of the
acquisition in due course prior to closing and may also consider
equity financing in relation to funding of the acquisition. There
are no financing conditions for the acquisition.
- BB Electronics had net debt of DKK 54.2 million as of 30
September 2021, and as of the same period Kitron had net debt of
NOK 791 million.
- The acquisition offers an attractive opportunity to create
significant value for Kitron's shareholders and is expected to
deliver returns well above Kitron's cost of equity and be clearly
accretive to underlying earnings.
- Through the addition of high quality, long-term earnings, the
transaction further diversifies Kitron's cash flows and strengthens
Kitron's ability to accelerate further growth.
The transaction is conditional upon customary closing conditions
and is expected to be completed January 2022. Until then, the two
companies will continue to operate as separate entities.
Integration preparations will start immediately upon closing.
AdvisorsSparebank 1 Markets AS is acting as
financial advisor and Advokatfirmaet Selmer AS as legal
advisor to Kitron. In addition, Ernst&Young has been engaged to
carry out financial due diligence, and Bird&Bird has carried
out legal due diligence in Denmark, the Czech Republic and
China.
Invitation to webcastKitron
will host an online presentation of the transaction at 10:00 CET
tomorrow, 21 December. The presentation can be accessed here:
https://channel.royalcast.com/landingpage/hegnarmedia/20211221_1/
A presentation is attached with this announcement.
For further information, please contact:Peter
Nilsson, President and CEO, tel. +47 94 84 08 50Cathrin Nylander,
CFO, tel: +47 900 43 284E-mail: investorrelations@kitron.com
Kitron is a leading Scandinavian electronics manufacturing
services company for the Connectivity, Electrification, Industry,
Medical devices and Defence/Aerospace sectors. The company is
located in Norway, Sweden, Lithuania, Germany, Poland, China and
the United States. Kitron had revenues of about NOK 4.0 billion in
2020 and has about 1 800 employees. www.kitron.com
IMPORTANT NOTICEThis information is considered
to be inside information pursuant to the EU Market Abuse Regulation
and is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act. This stock exchange
announcement was published by Cathrin Nylander, Chief Financial
Officer of Kitron ASA on 20 December 2021 at 21:50 CET.
This announcement is not and does not form a part of any offer
to sell, or a solicitation of an offer to purchase, any securities.
The distribution of this announcement and other information may be
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