2020-07-03
http://w3.windfair.net/wind-energy/news/23002-nkt-cables-to-acquire-abbs-high-voltage-cables-business-creating-a-leading-power-cable-company

News Release from NKT GmbH & Co. KG

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nkt cables to acquire ABBs high-voltage cables business, creating a leading power cable company

nkt cables has entered into a purchase agreement to acquire ABB HV Cables, a wholly owned business of the ABB Group, at an enterprise value of EUR 712m (DKK 5.3bn). Including ABB HV Cables’ committed investment in a new, cutting-edge cable-laying vessel to be delivered and paid in Q1 2017 of EUR 124m (DKK 0.9bn), total enterprise value amounts to EUR 836m (DKK 6.2bn).

ABB HV Cables is a leading supplier in the premium segment of AC and DC high-voltage cable systems for on- and offshore power transmission. In 2015, ABB HV Cables revenue was EUR 472m (DKK 3.5bn). As per 30 June 2016, ABB HV Cables had an order backlog of EUR 1.1bn (DKK 8.3bn) corresponding to 2.4 years of sales based on 2015 revenue.

Strong strategic rationale for acquisition of ABB’s high-voltage cables business

The combination of nkt cables and ABB HV Cables creates a leading on- and offshore high-voltage power cables company. ABB HV Cables is a leading player within DC high-voltage power cables, a position which allows nkt cables to enter this market, which has strong growth potential. Since 2012, ABB has made significant investments to position the business at the technological forefront of the high-voltage cable industry with best-in-class manufacturing facilities in Karlskrona, Sweden.

The new combined business will be strongly positioned in both the growing offshore wind industry as well as for the development of the interconnector grid in Europe. In addition, a strong organisational fit rooted in a shared Nordic heritage and culture is believed to support the integration of the business.

To secure future co-operation, nkt cables and ABB Group has signed an agreement for long-term strategic partnership to pursue market opportunities within interconnectors and onshore power transmission projects.

President and CEO of nkt cables, Michael Hedegaard Lyng, states: "The acquisition of ABB’s high-voltage cables business is a landmark transformation of nkt cables. We operate in an industry where innovation and scale is instrumental, and ABB’s cables business is the perfect strategic match to our business. Joining forces puts us among the leaders in the European high-voltage power transmission industry based on a strong and efficient manufacturing network, geographical presence and complementary know-how. Furthermore, with access to ABB’s DC cable technology we are strongly positioned to take active part in the development of the European grid infrastructure planned for the next 10-15 years. We look forward to welcoming our many new and highly skilled colleagues from ABB."

President and CEO of ABB Group, Ulrich Spiesshofer, comments: "We are combining two strong cable portfolios resulting in a business that is more competitive on a larger scale under nkt cables ownership, whilst maintaining access to supply through a long-term strategic partnership."

President of ABB Power Grids Division, Claudio Facchin, says: "We have entered into an agreement for the sale of our high-voltage business with nkt cables. ABB has been the proud owner of this world-leading business that holds an extensive track record within high-voltage cables systems. With nkt cables’ strong commitment to continue the development of the business, we have found the right combination to secure future technology leadership as well as a strong cultural fit between the two companies. We look forward to continue building the strong relationship with nkt cables and to cooperate on projects in the future and continue to support customers with the latest technologies."

Combined, the two businesses had a 2015 revenue of EUR 1.7bn and operational EBITDA margin of 11.4% (standard metal prices). Full impact of annual synergies of approx. EUR 30m is expected by end-2018. Total integration costs are expected to be a total of EUR 35-40m by end-2018. The integration process is expected to be completed by end-2018. 

Transaction overview

  • Enterprise value (EV) at closing of EUR 712m (DKK 5.3bn)
  • Total enterprise value of EUR 836m (DKK 6.2bn), including ABB HV Cables’ investment in new, cutting-edge cable-laying vessel to be delivered and paid in Q1 2017 of EUR 124m (DKK 0.9bn)
  • ABB HV Cables EBITDA: Average 2014-2016 (expected) EUR 79m (DKK 0.6bn)
  • Implied EV/EBITDA transaction multiples: 9.0x EBITDA average 2014-2016 (expected), corresponding to 6.5x EBITDA (incl. run-rate synergies) average 2014-2016 (expected)
  • Nordea and Danske Bank have committed to finance the transaction
  • NKT Group pro forma net interest-bearing debt/operational EBITDA is estimated to be approx. 3.0x at closing of the acquisition with an expected subsequent strong deleverage within 12 months
  • Closing is expected in Q1 2017 and conditional upon regulatory approvals and fulfilment of certain other conditions related to the transfer of ABB HV Cables
Source:
nkt cables
Link:
www2.nktcables.com/...



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