cunova to simultaneously acquire KME Group’s
aerospace specialty metals business
- The proposed business combination is expected to create a
scaled, global manufacturer of mission-critical specialty copper
alloy products with growth opportunities across diverse end markets
including casting, aerospace, maritime, industrial and energy.
- The combined company will have a compelling and proven business
model with historically high recurring revenue and attractive
margins, dynamic competitive positioning and barriers to entry, and
limited exposure to commodity price variation risk.
- If the proposed business combination is consummated, the
combined company is expected to have an enterprise value of
approximately US$736 million.
cunova GmbH (“cunova”) a leading global manufacturer of high-end
specialty copper alloy products, and SDCL EDGE Acquisition
Corporation (NYSE: SEDA) (“SEDA”), a special purpose acquisition
company, today announced that they have entered into a definitive
business combination agreement that is expected to result in cunova
becoming a publicly listed company on the New York Stock Exchange
(“NYSE”).
Headquartered in Osnabrück, Germany, cunova is a leading global
producer of mission‑critical copper alloy products and related
services and solutions for a diverse array of end markets including
casting, maritime, industrial and energy.
cunova has an established reputation and long-term relationships
with a loyal base of blue-chip customers, including a majority of
the 25 largest steel companies across four continents. cunova’s
products are often both mission-critical and integrated into
clients’ processes. Copper is one of the most widely used metals
today, and it is anticipated that the combined company will be well
positioned to capitalize on a sustained global demand for copper
alloys with high conductivity performance in thermal or electrical
applications, driven by new emerging markets and technological
advancements. cunova’s acquisition of the whole aerospace specialty
metals business of KME Group (“KME Aerospace”) would enable the
combined company to also serve the space exploration and general
aerospace markets.
cunova is dedicated to resource efficiency and the circular
economy, and supports the transition to energy conservation.
cunova’s products offer high levels of endurance, including
temperature and pressure resistance, allowing them to last longer
without replacement and enabling critical components to be
recycled. In 2023, over half of the copper used to make cunova’s
products was sourced from recycled scrap.
“We are thrilled to partner with SEDA. They have a deep
understanding of our business, vision, and growth opportunities,”
said Werner Stegmüller, CEO of cunova. “As a global leader in the
copper industry with an extensive history of success, cunova is
relentlessly committed to understanding and anticipating our
customers’ needs. We strive to be constantly innovative so as to
deliver high-end, value-added products and solutions that are both
mission-critical and specific to our customers’ processes. As a
result, we have built exceptionally close relationships with our
customers and an attractive business model with recurring revenues.
We believe we are well-positioned to deliver sustained, profitable
growth and returns to shareholders by leveraging our world‑class
platform to expand into new markets, driven by emerging technology
and trends, including space exploration.”
“We are excited to join forces with KME Aerospace, which we
believe will give us access to a new, exciting, and high-growth end
market. Space exploration activity is currently outpacing the
reusability rate of engines and we expect this could triple our
addressable copper component market opportunity from 2023 to 2030.
As an established provider of mission-critical rocket engine
components to nearly all the western tier one companies in the
space exploration sector, we believe KME Aerospace currently has a
first mover advantage in this end market,” added Werner Stegmüller,
CEO of cunova.
“We are extremely pleased to be partnering with cunova to help
them advance their vision and growth strategy,” said Jonathan
Maxwell, Chairman and Co-CEO of SEDA. “We set out to acquire a
company with a proven business model and strong growth prospects
that is poised to create long-term value for shareholders, and we
believe cunova meets these criteria. Finally, as a provider of
critical components that support the transition to energy
conservation and resource efficiency in the maritime and steel
industries and, following its acquisition of KME Aerospace, the
aerospace industry, the combined company is expected to contribute
meaningfully to its customers’ sustainability initiatives.”
“As part of cunova, we believe KME Aerospace will be well
positioned to capitalize on growth opportunities in space
exploration. As the anticipated majority shareholder of cunova
following the listing, KME Group will also have a vested interest
in cunova’s long-term growth and success,” said Vincenzo Manes,
Chairman of KME Group.
Transaction Overview
Under the terms of the proposed business combination agreement,
cunova will be indirectly acquired by a publicly-listed, successor
entity of SDCL EDGE Acquisition Corporation. Also as part of the
proposed business combination, cunova will acquire KME Aerospace
from KME Group. The combined company is expected to be listed on
the NYSE. Paragon Partners, the current majority shareholder of
cunova through its vehicle The Paragon Fund III GmbH & Co.
geschlossene Investment KG (“Paragon”), is expected to exit cunova
as a result of the proposed business combination, and KME Group is
expected to become the majority shareholder of cunova.
At closing, the combined company is expected to have a pro-forma
enterprise value of approximately US$736 million comprised of pro
forma net debt of US$289 million and an equity value of
approximately US$447 million. Existing SEDA shareholders and any
potential investors agreeing to commit to any equity transaction
that may be completed prior to the closing of the proposed business
combination are expected to own approximately 39.9% of the shares
outstanding of the combined company and KME Group is expected to
own the approximate remaining 60.1%. These estimates are subject to
certain assumptions as well as market conditions and the final
transaction structure.
The business combination values cunova and KME Aerospace at an
enterprise value of approximately 9.4 times cunova’s pro forma 2023
Adjusted EBITDA of US$78 million.
The board of SEDA and the shareholders of cunova have approved
the proposed business combination subject to customary closing
conditions. The closing conditions include, but are not limited to,
obtaining all required regulatory approvals, the approval of the
shareholders of SEDA, securing minimum cash of US$140 million,
refinancing cunova’s current debt, and the registration statement
to be filed in connection with the proposed business combination
being declared effective by the U.S. Securities and Exchange
Commission (the “SEC”). Assuming satisfaction of all closing
conditions, the proposed business combination is expected to close
in the second quarter of 2024.
Adjusted EBITDA Reconciliation
cunova
US$m1
2021
2022
2023P
Net income
22
15
6
Income taxes
4
8
9
Interest expense
10
20
33
Depreciation & Amortization
10
9
8
EBITDA
47
52
56
Exceptional Items (carve-out cost)
8
7
5
Adjusted EBITDA
55
59
61
1. Assumes 2023 average EUR/USD exchange rate of 1.081; values
may not add up due to rounding
Aerospace
US$m1
2021
2022
2023P
Net income
-
4
12
Income taxes
-
2
5
Interest expense
-
-
-
Depreciation & Amortization
-
-
-
EBITDA
-
6
18
Exceptional Items (carve-out cost)
-
-
-
Adjusted EBITDA
-
6
18
1. Assumes 2023 average EUR/USD exchange rate of 1.081; values
may not add up due to rounding
Advisors
Rothschild & Co is serving as sole financial and capital
markets advisor to SEDA. Skadden, Arps, Slate, Meagher & Flom
(UK) LLP is serving as counsel to SEDA. Latham & Watkins LLP is
serving as counsel to Paragon and cunova. Morgan, Lewis &
Bockius LLP is serving as counsel to KME. Davis Polk & Wardwell
LLP is acting as legal advisor to Rothschild & Co.
About cunova
Headquartered in Osnabrück, Germany, cunova (previously KME
Special Products and Solutions) has an extensive history as a
leading global producer of mission-critical copper alloy products
and solutions for a diverse set of end markets including casting,
maritime, and industrial & energy. cunova has a
well-established reputation for high quality products and solutions
and a demonstrated commitment to continuous innovation. For more
information about cunova, please visit https://www.cunova.com.
About KME Aerospace
KME Aerospace is a leading engineering business that supplies
high-tolerance copper alloy components to major players in the
aerospace industry. Through the expected acquisition of KME
Aerospace by cunova, the combined company would also serve the
space exploration market.
About SDCL EDGE Acquisition Corp.
SEDA is a special purpose acquisition company formed for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization, or similar business
combination with one or more businesses. For more information above
SEDA, please visit https://www.sdcledge.com.
The information contained on, or that may be accessed through,
the websites referenced in this press release is not incorporated
by reference into, and is not a part of, this press release.
Additional Information and Where to Find It
In connection with the proposed business combination, the
combined company will file a registration statement with the SEC,
of which a proxy statement/prospectus will form a part. The
definitive proxy statement/prospectus and other relevant documents
will be sent or given to SEDA’s shareholders as of a record date to
be established for voting at SEDA’s shareholder meeting relating to
the proposed business combination. SEDA and the combined company
may also file other documents regarding the proposed business
combination with the SEC. This press release does not contain all
of the information that should be considered concerning the
proposed business combination and is not intended to form the basis
of any investment decision or any other decision in respect of the
proposed business combination. SEDA’s shareholders and other
interested persons are advised to read, when available, the
registration statement of the combined company and the proxy
statement/prospectus which will form a part thereof and any
amendments thereto and all other relevant documents filed or that
will be filed in connection with the proposed business combination,
as these materials will contain important information about cunova,
KME Aerospace, SEDA, the combined company and the proposed business
combination. The registration statement of the combined company and
the proxy statement/prospectus which will form a part thereof and
other documents that are filed with the SEC, once available, may be
obtained without charge at the SEC’s website at www.sec.gov or by
directing a written request to: SDCL EDGE Acquisition Corporation,
60 East 42nd Street, Suite 1100, New York, NY, Attn: Francesca
Lorenzini.
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATORY AGENCY HAS
APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PRESS
RELEASE, PASSED UPON THE MERITS OR FAIRNESS OF THE PROPOSED
BUSINESS COMBINATION OR ANY RELATED TRANSACTIONS OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PRESS RELEASE. ANY
REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
Participants in the Solicitation
SEDA, cunova, certain shareholders of SEDA, KME Group, and
certain of SEDA’s, cunova’s, and KME Group’s respective directors,
executive officers and other members of management and employees
may, under SEC rules, be deemed to be participants in the
solicitation of proxies from the shareholders of SEDA with respect
to the proposed business combination. A list of the names of such
persons and information regarding their interests in the proposed
business combination will be contained in the registration
statement of the combined company and the proxy
statement/prospectus which will form a part thereof, when
available. Shareholders, potential investors and other interested
persons should read the registration statement of the combined
company and the proxy statement/prospectus which will form a part
thereof carefully when they become available and before making any
voting or investment decisions. Free copies of these documents may
be obtained from the sources indicated above, when available.
No Offer or Solicitation
This press release is for informational purposes only and shall
not constitute a solicitation of a proxy, consent, or authorization
with respect to any securities or in respect of the proposed
business combination. This press release shall also not constitute
an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any states
or jurisdictions in which such offer, solicitation, or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of the U.S. Securities Act of 1933, as amended, or an
exemption therefrom.
Forward-Looking Statements
This press release includes certain statements that are not
historical facts but are forward-looking statements for purposes of
the applicable U.S. securities laws. Forward-looking statements
generally are accompanied by words such as “anticipate,” “believe,”
“continue,” “estimate,” “expect,” “intend,” “may,” “plan,”
“predict,” “potential,” “seek,” “seem,” “should,” “will,” “would,”
and similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. These
forward-looking statements are based on various assumptions,
whether or not identified in this press release, and on the current
expectations of the respective management of SEDA, cunova and KME
Group and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on
as, a guarantee, an assurance, a prediction or a definitive
statement of fact or probability. Actual events and circumstances
are difficult or impossible to predict and will differ from
assumptions. Many actual events and circumstances are beyond the
control of SEDA, cunova or KME Group. Potential risks and
uncertainties that could cause the actual results to differ
materially from those expressed or implied by forward-looking
statements include, but are not limited to: the outcome of any
legal proceedings that may be instituted in connection with the
proposed business combination; delays in obtaining, adverse
contained in, or the inability to obtain necessary regulatory
approvals or complete regulatory reviews required to complete the
proposed business combination; the risk that the proposed business
combination disrupts cunova’s or KME Aerospace’s current plans and
operations; the inability of cunova to recognize the anticipated
benefits of the proposed business combination, including its
acquisition of KME Aerospace, which may be affected by, among other
things, competition, the ability of the combined company to grow
and manage growth profitably with customers and suppliers and
retain key employees; the risk that cunova’s or KME Aerospace’s
projected pipeline of projects and production capacity do not meet
cunova’s or KME Aerospace’s proposed timeline or that such pipeline
fails to be met at all; costs related to the proposed business
combination; the risk that the proposed business combination does
not close in the second quarter of 2024 or does not close at all;
changes in the applicable laws or regulations; the possibility that
cunova, KME Aerospace, or the combined company may be adversely
affected by other economic, business, and/or competitive factors;
economic uncertainty caused by the impacts of geopolitical
conflicts, including Russia’s invasion of Ukraine and the ongoing
conflicts in the Middle East; economic uncertainty due to rising
levels of inflation and interest rates; the risk that the approval
of the shareholders of SEDA for the proposed business combination
is not obtained; the risk that any current or future equity or debt
transactions are not completed prior to the closing of the proposed
business combination; the risk that even if any current or future
equity or debt transactions are completed, they will not be
sufficient to satisfy the minimum cash condition set forth in the
definitive documentation in connection with the proposed business
combination and/or fund the combined company’s execution on its
near-term project pipeline allowing the combined company to scale
its operations; the amount of redemption requests made by SEDA’s
shareholders and the amount of funds remaining in SEDA’s trust
account after satisfaction of such requests prior to the closing of
the proposed business combination; SEDA’s, cunova’s, KME
Aerospace’s and the other parties to the definitive documentation
in connection with the proposed business combination ability to
satisfy the conditions to closing the proposed business
combination; the ability to maintain listing of SEDA’s securities
on the NYSE; and those factors discussed in SEDA’s public reports
filed with the SEC, including its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
the proxy statement relating to SEDA’s extension, as well as the
registration statement on Form F-4 of the combined company, and the
proxy statement/prospectus which will form a part thereof that the
parties intend to file with the SEC in connection with the proposed
business combination. If any of these risks materialize or SEDA’s,
cunova’s or KME Group’s assumptions prove incorrect, actual results
could differ materially from the results implied by these
forward-looking statements. There may be additional risks that
neither SEDA, cunova nor KME Group presently know, or that SEDA,
cunova and KME Group currently believe are immaterial, that could
also cause actual results to differ from those contained in the
forward-looking statements. In addition, forward-looking statements
reflect SEDA’s, cunova’s and KME Group’s expectations, plans or
forecasts of future events and views as of the date of this press
release. SEDA, cunova and KME Group anticipate that subsequent
events and developments may cause their assessments to change.
SEDA, cunova and KME Group specifically disclaim any obligation to
update or revise any forward-looking statements, except as required
by law. These forward-looking statements should not be relied upon
as representing SEDA’s, cunova’s or KME Group’s assessments as of
any date subsequent to the date of this press release. Accordingly,
undue reliance should not be placed upon the forward-looking
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20240220283857/en/
Investor and Media Contacts
Ned Davis Chief Financial Officer SDCL EDGE Acquisition
Corporation (917) 941-8334 ned.davis@sdclgroup.com
Francesca Lorenzini Investor Relations Director SDCL EDGE
Acquisition Corporation (512) 632-0292
francesca.lorenzini@sdclgroup.com
Financial Profiles, Inc. Moira Conlon mconlon@finprofiles.com
(310) 622-8220 Kelly McAndrew (310) 622-8239
kmcandrew@finprofiles.com
SDCL EDGE Acquisition (NYSE:SEDA)
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