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Kitron acquires Danish EMS provider, expands geographic footprint


(2021-12-20) Kitron has entered into an agreement to acquire Danish EMS company BB Electronics A/S, which has production facilities in Denmark, China and the Czech Republic. The deal is clearly earnings accretive and adds significant shareholder value.

"BB Electronics gives us a solid position in one more Nordic country and extends Kitron’s footprint in CEE and China. The acquisition also provides a pathway to establishment in India. BB Electronics has well-run and highly automated manufacturing operations serving a loyal long-term customer base. Its position within higher-complexity segments fits perfectly with Kitron's strategy," said Peter Nilsson, President and CEO of Kitron.

“We're impressed with the track record of the BB team and look forward to working together.
We expect BB Electronics to continue with very little change. BB CEO Carsten Christensen will join the Kitron Group management, maintaining current responsibilities. We expect the transaction to be immediately earnings accretive for Kitron, while also supporting our growth strategy," said Mr. Nilsson.

Founded in 1975, BB Electronics is a full-service EMS (Electronics Manufacturing Services) provider based in Horsens, Denmark. The group has revenues of about DKK 1,000 million in 2021 and about 750 employees and has over the past years grown significantly, both organically and through M&A. The customer base is concentrated within industry, telecom and medical.

"We believe the match with Kitron is excellent and provides an even stronger platform for BB Electronics, including a North American manufacturing presence, which is in strong demand from our existing customer base. We look forward to executing on our growth strategy under the Kitron umbrella," said Carsten Christensen, CEO of BB Electronics.

"The European EMS industry is highly fragmented, and we're convinced that we will be even stronger together as we leverage our individual strengths to continue both companies’ track records of profitable growth," added Mr. Nilsson.

Transaction details

  • Kitron will acquire 100 percent of the shares of BB Electronics A/S from BB Electronics Holding ApS, which is owned by external investors as well as BB Electronics management for a total of DKK 600 million (approximately NOK 822 million), on a debt- and cash-free (Enterprise Value) basis.
  • The acquisition includes all operations and assets of BB Electronics, inter alia in Denmark, the Czech Republic and China.
  • BB Electronics is highly complementary to Kitron, adding operations in jurisdictions where Kitron currently has a limited presence.

Key strategic benefits

  • The acquisition will provide Kitron with a strategic geographical expansion, establishing a presence and gateway in Denmark, an additional Nordic country. Further, Kitron will have a strengthened presence in CEE with a site in the Czech Republic, a pathway to establishment in India and increased footprint and added capacity and capabilities in China.
  • The acquisition provides opportunities for synergies. Following completion, Kitron expects to increase its competence and offering within production automation and sees new opportunities for efficiency improvements.
  • Existing BB Electronics customers may benefit from Kitron's US operations, providing a broader customer base for the combined group.
  • Valuable management resources will add to Kitron and profitable contribution to Kitron is expected from day 1 following completion.
  • In summary, the acquisition is anticipated to be clearly accretive to Kitron.

Financial details

  • BB Electronics has estimated revenues of approximately DKK 1,000 million (approximately NOK 1,370 million) in 2021. Over the same period, the company has an estimated operating profit (EBIT) of approximately DKK 66 million (approximately NOK 90 million).
  • Kitron has established a term loan facility with DNB Bank ASA, has available revolving credit facilities and received binding offers for debt financing of the acquisition. Kitron expects to enter into agreements for relevant debt financing of the acquisition in due course prior to closing and may also consider equity financing in relation to funding of the acquisition. There are no financing conditions for the acquisition.
  • BB Electronics had net debt of DKK 54.2 million as of 30 September 2021, and as of the same period Kitron had net debt of NOK 791 million.
  • The acquisition offers an attractive opportunity to create significant value for Kitron's shareholders and is expected to deliver returns well above Kitron's cost of equity and be clearly accretive to underlying earnings.
  • Through the addition of high quality, long-term earnings, the transaction further diversifies Kitron's cash flows and strengthens Kitron's ability to accelerate further growth.

The transaction is conditional upon customary closing conditions and is expected to be completed January 2022. Until then, the two companies will continue to operate as separate entities. Integration preparations will start immediately upon closing.

Sparebank 1 Markets AS is acting as financial advisor and Advokatfirmaet Selmer AS as legal advisor to Kitron. In addition, Ernst&Young has been engaged to carry out financial due diligence, and Bird&Bird has carried out legal due diligence in Denmark, the Czech Republic and China.

Invitation to webcast
Kitron will host an online presentation of the transaction at 10:00 CET tomorrow, 21 December. The presentation can be accessed here:

A presentation is attached with this announcement.

For further information, please contact:
Peter Nilsson, President and CEO, tel. +47 94 84 08 50
Cathrin Nylander, CFO, tel: +47 900 43 284

Kitron is a leading Scandinavian electronics manufacturing services company for the Connectivity, Electrification, Industry, Medical devices and Defence/Aerospace sectors. The company is located in Norway, Sweden, Lithuania, Germany, Poland, China and the United States. Kitron had revenues of about NOK 4.0 billion in 2020 and has about 1 800 employees.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act. This stock exchange announcement was published by Cathrin Nylander, Chief Financial Officer of Kitron ASA on 20 December 2021 at 21:50 CET.

This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Kitron believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice. Kitron undertakes no obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.

This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities of Kitron. Neither Kitron, SpareBank 1 Markets AS nor any of their respective affiliates accepts any liability arising from the use of this announcement.


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