The Nordic Exchange
Nikolaj Plads 6
DK-1007 Copenhagen K
8 May 2007
Release No. 9
Nilfisk-Advance acquires Viper Group
Nilfisk-Advance has entered into an agreement to acquire the Viper Group
(“Viper”). Based in Dongguan in southern China, Viper is a leading Chinese
manufacturer and supplier of professional cleaning equipment. The acquisition
will give Nilfisk-Advance a leading position in the rapidly growing Chinese
market and provide a platform for accelerated access to new markets.
The acquisition of Viper Group is conditional upon the Chinese authorities
approving the sale of Viper's Chinese companies. We expect the transaction to be
finalized in the course of the coming months.
The transaction includes acquisition of three Asian companies (Dongguan Viper
Cleaning Equipment Company Limited, Viper Cleaning Equipment (Shanghai) Limited
and Viper (Hong Kong) Company Limited), along with acquisition of the business
and assets of the separate US company, Viper Industrial Products LLC.
With the anticipated takeover of Viper, Nilfisk-Advance will be able to
supplement its existing production platform in China, and - through Viper's
well-established sales organisation - gain access to an additional network of
sales channels and customers principally in the United States and China.
Viper Group
A well-run company with around 600 employees, Viper is expecting revenue of
around 25 mUSD in 2007. Viper is a 25-year-old, private-owned company with a
product programme comprising vacuum cleaners, floor washers, wet/dry vacuum
cleaners, floor polishers and carpet cleaning equipment. This programme
principally addresses the commercial cleaning market (i.e. contract cleaning
companies) with products in the mid-price range.
Viper has headquarters and production in Dongguan, southern China, a number of
Chinese regional sales offices managed from Shanghai, and a sales and
distribution centre based in Hong Kong. In North America, Viper consists of a
separate sales company in the state of Michigan.
Read about Viper at www.viperind.com.
Purchase price and effect on earnings
The agreed purchase price for Viper is around 54 mUSD (Enterprise Value),
corresponding to an expected EV/EBITDA of around 11 for 2007. Based on
anticipated continuing high organic growth, Viper's earnings after three years
of ownership are expected to correspond to an EV/EBITDA of around 4.
The acquisition is expected to receive authority approval in mid-2007, and will
thus increase current-year revenue 12 mUSD. Owing to amortisation of intangible
assets, financing costs and minor implementation costs, NKT's consolidated net
income before tax for 2007 will be moderately reduced - by 4 mDKK. The
acquisition will be financed through the NKT Group's existing credit facilities.
Our Quarterly Report 1/2007 which will be published on 24 May 2007 will include
revised 2007 expectations for the NKT Group.
Element of expansion strategy
The Viper acquisition is an element in our expansion strategy, and represents an
attractive supplement to the strong underlying organic growth rate of
Nilfisk-Advance, amounting to 7% annually in recent years. The transaction will
provide Nilfisk-Advance with an enlarged platform for positioning itself in the
fast-growing Chinese market and for increasing utilisation of its existing sales
network. As soon as Viper becomes a member of the Nilfisk-Advance organisation,
NKT (Nilfisk-Advance plus NKT Cables) employs around 1.100 people in China.
Synergies
The principal synergy attached to the Viper acquisition lies in the potential
for creation of growth in existing and future markets. Nilfisk-Advance will be
able to utilize its global sales network to market Viper products in existing
markets, and at the same time Viper's mid-price products will be well-suited for
paving the way in new markets - such as in Asia, Eastern Europe and South
America.
Sales of Viper products are expected to triple over a five-year period, with
cost synergies of around 3 mUSD being realised.
Further, Viper's vertically-integrated low-cost production set-up can be
utilised also in conjunction with Nilfisk-Advance's existing production.
There is expected to be no need to implement rationalisation and efficiency
measures in contexts other than possibly procurement and administration.
Organisation
Viper's current Chief Executive, Simon Chen, will continue to be responsible for
the company management, the future plan being to operate Viper as a separate
entity in the Nilfisk-Advance Group.
The combined Nilfisk-Advance and Viper organization will be represented through
production and sales subsidiaries in 36 countries. There will also be an
extensive network of dealers covering most of the world.
Nilfisk-Advance and Viper together represent annual overall revenue of around
800 mEUR
(6 bnDKK). The combined organization will contain some 4,500 people
(3,900 at Nilfisk-Advance and 600 at Viper).
Read about Nilfisk-Advance at www.nilfisk-advance.com.
Further information
Please address any questions regarding the information above to the undersigned
on telephone no. +45 4348 2000 - or to Jørgen Jensen, Chief Executive of
Nilfisk-Advance, on telephone no.
+45 4323 8100.
Yours faithfully
NKT Holding A/S
Thomas Hofman-Bang
President and CEO
