18th Jul 2011 07:00
NEWS RELEASEGKN plc18 July 2011 GKN to acquire Stromag Holding GmbH
GKN plc today announces that it has signed an agreement with the shareholders of Stromag Holding GmbH (Stromag), to acquire the entire issued share capital of the business. Stromag is a privately held company whose shareholders include Equita GmbH & Co. Holding KGaA and a large number of other organisations and individuals, including management.
Stromag, which will be integrated into GKN Land Systems division, is a market leading engineer of industrial power management components with a strong technology base and focus on providing tailored solutions for its customers. Its core products include hydraulic clutches, electro-magnetic brakes and flexible couplings serving end-markets including agricultural equipment, construction and mining machinery, renewable energy and the metal processing industry with a well recognised and valued brand. The business is headquartered in Unna, Germany and has operations in Germany, France, USA, Brazil, India and China.
The acquisition cost comprises a cash consideration of €164 million (£146 million) for the equity and repayment of debt of €31 million (£28 million). Closing of the transaction is expected during September, subject to customary conditions and necessary regulatory approvals. The acquisition will be funded from the Group's existing resources.
For the last audited year ended 31 December 2010, Stromag reported sales of € 111 million (£99 million), EBITDA of €19 million (£17 million), profit before taxation of €10 million (£9 million) and gross assets were €103 million (£92 million). In 2011, sales are expected to be around €140 million (£125 million) and the acquisition price equates to a multiple of 7.5 to 8.0 times expected 2011 EBITDA. The impact of the transaction on GKN is expected to be earnings enhancing on a management basis(1) from the first full year of ownership.
Andy Reynolds Smith, Executive Director, GKN plc, commented: "The acquisition of Stromag is an important step in the implementation of the GKN Land Systems' strategy to build a global leader in Industrial Power Management, extending our capability in electro mechanical components. In combination with our existing business, it will provide a strong platform to accelerate growth in existing markets, together with access to a number of attractive new industrial segments including renewable energy."
Notes:
Exchange rate used £1: €1.12
(1) Management earnings are Group earnings adjusted to exclude the earnings impact of restructuring and impairment charges, gains and losses on changes in Group structure, amortisation of non-operating intangible assets arising on business combinations, change in value of derivative and other financial instruments, other net financing charges and material pension scheme curtailments.
Further EnquiriesGuy Stainer
Director, Investor Relations and External Communications
GKN plcT: +44 (0)207 463 2382M: +44 (0)7739 778 187E: [email protected] LorenzFinancial DynamicsT: +44 (0)20 7269 7113M: +44 (0)7775 641 807Cautionary Statement
This announcement contains forward looking statements which are made in good faith based on the information available to the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statementwhich could cause actual results to differ materially from those currently anticipated.
Notes to Editors
GKN Land Systems is a global, market leading supplier to the agricultural, construction, industrial, mining and automotive industries and is supported by an extensive aftermarket organisation through a network of distribution points. GKN Land Systems has more than 5,000 employees worldwide and has facilities in Europe, North and South America and China.
GKN plc is a global engineering business serving the automotive, aerospace and land systems markets. It has operations in more than 30 countries, around 40,000 employees in subsidiaries and joint ventures and had sales of £5.4 billion in the year ended 31 December 2010. GKN plc is listed on the London Stock Exchange .
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