PKC Group Oyj - Tender offer

PKC Group expands with acquisition to rolling stock electrical distribution systems

PKC Group Plc         Company Announcement 13 February 2015      08.00 am


PKC Group expands with acquisition to rolling stock electrical distribution
systems 



PKC Group has yesterday signed a contract to buy the rolling stock electrical
distribution system business (Wiring & Controls business) of Groclin S.A.
Group, a company listed on the Warsaw stock exchange. 



The deal includes Kabel-Technik-Polska Sp. z o. o. (‘KTP') operating in Poland,
which at the time of the closing will own the entire Wiring & Controls business
of Groclin S.A. Group. The Wiring & Controls business develops and manufactures
electrical cabinets, powerpacks and electrical distribution systems for rolling
stock manufacturers. The clientele also includes the on/off highway commercial
vehicle, energy and materials handling industry. The customers are leading
companies in their field and mainly operate globally. Wiring & Controls
business revenue in 2014 totalled some EUR 56 million, normalised EBITDA %
totalled some 7%, and number of personnel at the end of 2014 totalled about
2000. 



The net debt free purchase price is EUR 50 million. The acquisition takes place
via a new company, in which PKC Group has an 80% holding and Wiring & Controls
business' management has a 20% holding. PKC Group and minority shareholders
have agreed on a call option structure, within the framework of which PKC Group
will acquire the minority shareholders' shares not before than two years from
the closing of the deal. 





PKC Group President & CEO Matti Hyytiäinen:



The acquisition is in line with our strategy published in spring 2013. The deal
expands PKC Group's product portfolio and customer base to cover rolling stock
manufacturers. The global rolling stock electrical cabinet, powerpack and
electrical distribution system market is valued at EUR 2 billion annually, and
the supply chain is fragmented. This acquisition opens an opportunity for PKC
Group to build a global rolling stock company serving rolling stock
manufacturers wherever they are located. By combining the strengths PKC Group
and Wiring & Controls business of Groclin S.A. have, we can offer competitive
solutions, thereby meeting customers' global partnership need. The acquisition
helps us to strengthen our position on the construction machine, bus and trucks
markets and opens an entry to customers in the energy and materials handling
segments. 



During the last year, Wiring & Controls business has implemented an extensive
programme enhancing competitiveness and efficiency, the costs of which have
affected the company's result in 2014, which will also have a minor impact on
the result of the first half of 2015. However, we believe that the measures
described above and the positive outlook in the rolling stock segment offers a
solid foundation to develop the company's result. 





Groclin S.A. Group CEO and main shareholder André Gerstner:



The Wiring & Controls business has grown during the last few years and
strengthened its position within rolling stock customers. At the same time, the
demands of the global clientele for a more extensive portfolio of products and
services and for global presence have risen. We estimate that, as part of PKC
Group, Wiring & Controls business can better meet customers' future needs,
which is why we have made this decision. With this transaction, Wiring &
Controls business transfers under the ownership that is capable of investing in
the growth, thereby meeting our customers' future needs. With this deal Groclin
S.A. Group is able to strengthen and to invest in its other main business,
automotive seats and trim covers. I am also glad that this deal offers me the
opportunity to develop Wiring & Controls business in the future as part of PKC
Group while ensuring that the value of my ownership in Groclin S.A. develops
favourably. 







The net debt free purchase price is EUR 50 million, and EUR 40 million of the
purchase price is financed with a new long-term loan and EUR 10 million with
PKC Group's cash resources. 



The closing is subject to common conditions including merger control filings.
The closing is targeted by 30 June 2015, and Wiring & Controls business will be
consolidated to PKC Group as of the date of closing the deal. PKC will publish
a separate release on the closing of the deal. The acquisition is estimated not
to have a significant impact on PKC Group's 2015 result. 



The Clairfield International offices in Finland (PCA Corporate Finance) and
Poland (CET) served as PKC Group's financial advisor, Weil, Gotshal & Manges as
legal advisor and Deloitte as financial and taxation advisor. 





PKC Group Plc



Board of Directors



Matti Hyytiäinen

President & CEO



For more information, please contact:

Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968



A separate presentation about the acquisition is available at company website
at www.pkcgroup.com 



Distribution

Nasdaq Helsinki

Main media

www.pkcgroup.com





PKC Group is a global partner, designing, manufacturing and integrating
electrical distribution systems, electronics and related architecture
components for the commercial vehicle industry and other selected segments. The
Group has production facilities in Brazil, China, Estonia, Finland, Germany,
Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in
2014 totalled EUR 829.2 million. PKC Group Plc is listed on Nasdaq Helsinki.