FRIWO : acquires transformer and choke production in Vietnam and expands its value chain

12. December 2016

Ostbevern, December 8, 2016 - As part of an asset deal, FRIWO AG acquires production facilities for transformers and chokes from a supplier in Vietnam. A corresponding agreement with the Group Intellect Power Technology Limited (GIP), Hong Kong, was signed today. The factory is located in an industrial park near Ho Chi Minh City in close vicinity to the FRIWO production site which was set up in 2015. Due to the acquisition the power supply company expands its value chain and manufactures an important component for the FRIWO products in-house. The Executive Board expects positive effects in terms of delivery reliability, productivity and product quality.

The purchase price is USD 3.4 million plus the inventory of raw, semi-finished and finished products. From today's perspective, the total purchase price will sum up to USD 4.8 million.

Approximately 90 percent of the acquired business' revenues are already attributable to sales to the FRIWO group. By deepening the value chain while exploiting the synergies, resulting from the integration into its production site in Vietnam, FRIWO expects an additional positive contribution to consolidated earnings before interest and taxes (EBIT) of more than EUR 1 million in 2017. Due to the already strong supply relationships, Group sales will be positively affected only in the low single-digit million euro range. The transformer and choke production currently employs around 850 people.

Lothar Schwemm, Executive Board Member of FRIWO AG and responsible for Technology and Sales: '2016 is characterized by the ramp-up of our new production plant in Vietnam and the corresponding reorganization of our global production base, and it is all proceeding faster than originally assumed. By acquiring the production of our partner GIP, we can further strengthen this attractive location by manufacturing an important component of our products.'

Martin Schimmelpfennig, Executive Board Member and responsible for Finance and Operations: 'Our new involvement is profitable and will contribute positively to the FRIWO result right from the start. Due to the favorable cost situation in Vietnam, we will also be able to manufacture transformers and chokes for third parties in the future.

The transaction is subject to various market conditions and is expected to be completed in January 2017.