FROM HUDSON SANDLER FOR
FOR RELEASE 07.00
7 January 2014
THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA OR AUSTRALIA, JAPAN OR SOUTH AFRICA OR ANY JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION IS UNLAWFUL.
Brammer plc ("Brammer", the "Company" or the "Group")
Acquisition of Lonne Holding AS
A leading Scandanavian distribution business
Brammer, the leading pan-European added value supplier of industrial maintenance, repair and overhaul product solutions, is pleased to announce that it has agreed to acquire Lonne Holding AS ("Lonne") from Credo Invest and Terje Lonne, who each own 50% of Lonne, for an initial cash consideration of NOK 190.1m (GBP 19.0m), together with the assumption of net debt estimated at NOK 188.1m (GBP 18.8m) on completion. In addition, a deferred cash consideration of up to NOK 80m (GBP 8.0m) is payable based on a multiple of the increased EBITDA over set targets for each of the years 2014, 2015 and 2016.
The consideration for the acquisition will be satisfied through borrowings from the Group's existing facilities. The deal is expected to complete by mid January 2014 and is expected to be earnings enhancing in 2014 and thereafter (before amortisation of intangible assets and exceptional costs).
Overview of the Acquisition
Lonne is a leading distributor of OEM and MRO industrial products, operating predominantly in Norway and Sweden with further operations in Finland and Denmark.
The key focus of the product range is motors, inverters, bearings and power transmission. Lonne has 4500 active customers principally in Oil and Gas, Fisheries, Mining, Energy and Food processing, with customers serviced through a network of 15 branches and a Nordic central warehouse in Helsingborg, southern Sweden. The management team led by the CEO Ole Jacob Myre will remain with the business post acquisition and Terje Lonne will remain as an adviser anddirector of the business.
For the year ended 31 December 2013, Lonne is estimated to generate revenues of NOK 495.2m (2012 actual: NOK 492.0m), adjusted EBITDA of NOK 18m (2012 actual: NOK 27.7m). Revenues in 2011 were NOK 506.7m and adjusted EBITDA was NOK 33.1m. The business substantially reduced its cost base in 2013 and trading in the fourth quarter of 2013 has returned to 2011 levels and Lonne expects to increase its profitability significantly in 2014, before taking account of synergies.
As at 31 December 2012, Lonne had net assets of NOK 112.3 million and gross assets of NOK 492.2 million.
Background to and reasons for the Acquisition
Brammer's strategy is to focus on the continuing development and growth of the Group's core distribution business as a pan-European market leader. The proposed acquisition of Lonne supports this strategy and provides the Group with:
· a leading presence in the Nordic market;
· a number of cross-selling opportunities to Lonne's customer base particularly in Tools and General Maintenance;
· a significant incremental opportunity to service existing Brammer key accounts in the Nordic region; and
· a highly experienced team with excellent product knowledge in their markets.
Commenting on the acquisition, Ian Fraser, Chief Executive Officer of Brammer, said:
"Lonne is an excellent strategic acquisition for the Group, providing us with the opportunity to enhance our position significantly in the Nordic region, an important growth market. We look forward to working alongside Lonne's highly experienced and knowledgeable team and through the support of Brammer's market leading pan-European distribution network, product offer and expertise we are well placed to leverage a number of cross selling opportunities, improve margins and drive the Lonne business forward."
Brammer plc +44 (0) 1565 756 801
Bill Whiteley, Chairman
Ian Fraser, Chief Executive Officer
Paul Thwaite, Group Finance Director
Investec Bank plc +44 (0) 20 7597 5970
Hudson Sandler +44 (0) 20 7796 4133
1. The statements in this announcement regarding the enhancement of earnings per share do not constitute profit forecasts nor should they be interpreted as meaning that the earnings per share of the Company for the current or future years will necessarily match or exceed the historical published earnings of the Company
2. Financial figures for Lonne are extracted from unaudited management accounts and other financial sources provided by Lonne