Swisslog’s board of directors supports combination with KUKA
Transaction valued at more than $350 million expected to close by end of 2014.
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KUKA AG, based in Germany, has announced an all-cash public offer to the shareholders of Swisslog Holding AG for all publicly held registered shares for a price of CHF 1.35 ($1.42) per share. Swisslog’s board of directors is recommending that the offer be accepted.
This represents a purchase price of MCHF 338 ($356.4 million) and an enterprise value of MCHF 353, ($372.2 million) including net liquidity and pension liabilities. The offer represents an 8.9% premium to the closing price on September 24, 2014, and a 15.4% premium over the 60-day volume weighted average price of Swisslog shares.
According to a press release issued today, the Swisslog brand, business model and both divisions (healthcare solutions and warehouse and distribution solutions) will remain in place. The release stated that the combination with KUKA will “strengthen Swisslog’s market position through added growth potential, improved access to key technologies and broadened offering.”
In a recent interview, Bill Leber, director of business development and marketing for Swisslog, said he does not expect any operational changes as a result of the acquisition. “For us, it’s business as usual,” he said. “We have worked with them for years as a supplier, and have become very familiar with their capabilities over our long relationship. I think this development is a positive.”
Swisslog delivers automation solutions for hospitals, warehouses and distribution centers, with a focus on the retail industry including e-commerce, pharma and temperature-controlled food. KUKA is one of the world’s leading suppliers of robots and automated production systems, primarily serving customers in fast-growing markets in the automotive industry but also increasingly in other sectors, such as the aviation and machine tool industries. “Together, the aim is to create a new, global supplier of integrated automation solutions for numerous industries,” today’s release continued. “The integration of Swisslog as a separate business within the KUKA group will facilitate new growth potential through optimized market penetration, market access and the opening of new markets. In addition, the combined company can benefit from synergies arising from the shared use of technology, the pooling of know-how, in the areas of procurement and services, and through the shared use of international facilities.”
According to the release, the established Swisslog brand, the company’s business model with its healthcare solutions and warehouse & distribution solutions divisions and its worldwide presence will remain in place. Peter Hettich, delegate of the Board of Directors and chairman of the Executive Committee of Swisslog, stated: “Together with KUKA, Swisslog can achieve its objectives faster and better and therefore seize development opportunities for our customers as well as for our employees. We see considerable potential in providing KUKA products, technologies and solutions to our customers, such as mobile robotic platforms in warehouse logistics, small robots in distribution centers, or sensitive lightweight robots in the assembly or the health-care segments. Conversely, we will be able to provide our logistics know-how to KUKA’s large automotive customers, for example in production or warehouse logistics. Lastly, Swisslog will benefit from KUKA’s strong international presence, especially in the US and in China.”
Swisslog’s board of directors has undertaken a review of the offer in addition to commissioning an independent opinion conducted by Bank J. Safra Sarasin. Hans Ziegler, Chairman of the Board of Directors of Swisslog, said: “In our opinion KUKA’s offer reflects a fair value, and a combination with KUKA is in the best interests of our shareholders, employees and customers. We therefore unanimously recommend that our shareholders accept KUKA’s offer and tender their Swisslog shares.”
The board member that has a connection to KUKA abstained from the decision-making. The Grenzebach Group and Swoctem GmbH, which are Swisslog’s largest single shareholders, fully support the transaction. Swisslog’s board of directors was advised by Lazard and Baker & McKenzie.
KUKA’s offer prospectus is expected to be published on or around October 6, 2014, and the offer period is expected to begin on or around October 21, 2014. A takeover of at least two thirds of the share capital of Swisslog is being targeted. Peter Hettich, Johann Löttner and Jürg Rückert have agreed to resign from the board of directors of Swisslog should the offer be accepted.
KUKA CEO Till Reuter would be nominated as a new board member. Subject to the approval of the relevant competition authorities, the transaction is expected close year-end 2014.
Completion of the offer would prompt the early termination of Swisslog‘s stock ownership plan and would also incur further transaction-related costs. These one-off costs would likely result in Swisslog falling short of its EBIT margin forecast of 2.5% to 3.0% for the full year, which was announced at the 2014 half-year results presentation.
About the AuthorJosh Bond, Senior Editor Josh Bond is Senior Editor for Modern, and was formerly Modern’s lift truck columnist and associate editor. He has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce University.
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