NKT acquires SolidAl, adding medium- and high-voltage capacity to address growing grid demand
June 21 2024 - 3:50AM
NKT acquires SolidAl, adding medium- and high-voltage capacity to
address growing grid demand
Company announcement
21 June 2024Announcement No. 15
NKT acquires SolidAl, adding medium- and high-voltage
capacity to address growing grid demand
NKT has acquired SolidAl, a Portugal-based power cable company,
from Njord Partners, adding medium- and high-voltage capacity to
meet the growing demand from grid upgrades and renewable energy
projects across Europe. As part of the acquisition, NKT will invest
in additional capacity at the existing site.
As the electrification of society continues to gain momentum,
power generation and consumption is increasing. Upgrading Europe’s
aging power grid infrastructure and connecting a growing number of
renewable power projects is driving demand for medium- and
high-voltage power cables. According to the International Energy
Agency (IEA), reaching national climate goals requires adding or
refurbishing a total of more than 80 million kilometres of power
grids by 2040, the equivalent of the entire existing global grid
and the European Union estimates that Europe will need to invest
EUR 584bn to upgrade its power grids this decade.
To satisfy this growing demand from power grid customers, NKT
has acquired SolidAl. The acquisition is supporting NKT’s growth
strategy and will:
- Increase medium- and high-voltage capacity up to 225kV
- Improve competitiveness of NKT’s product offering and
geographical reach across new and existing markets
- Provide a competitive, competent and expandable platform for
future growth to serve increased demand
- Support NKT’s medium-term ambitions, including RoCE above
20%
“SolidAl provides a strong strategic fit in terms of capacity
and competence, strengthening NKT’s position in serving customers
with end-to-end grid solutions, particularly the growing demand for
medium- and high-voltage power cables up to 225 kV. We look
forward to welcoming SolidAl’s highly skilled employees to NKT and
continuing our growth journey together. With more than 50 years in
the industry, SolidAl will complement the competitiveness of the
product mix from NKT’s existing factories in Asnaes, Velke Mezirici
and Cologne focusing on delivering the full range of power cables
for the grid at a larger scale,” says Claes Westerlind, President
and CEO of NKT.
“NKT’s acquisition of SolidAl is a testament to our team’s
dedication and hard work. NKT is a widely recognized worldwide
leader in the manufacturing of power cables and accessories, and I
could not think of a better owner to support SolidAl in expanding
its commercial reach and technical capabilities,” says François
Moufflet, CEO, SolidAl.
Adding an established production footprint in Southern Europe
will enhance NKT’s geographical footprint and reach in selected key
markets. SolidAl’s strong presence in France, UK, Ireland, Spain,
and Portugal expands NKT into new markets and strengthens its
existing foothold in others.
In 2023, SolidAl had revenue (in market prices) of approximately
EUR 150m and generated an EBITDA of approximately EUR 20m. NKT has
acquired SolidAl for a total enterprise value of EUR 192m,
corresponding to an EV/EBITDA multiple of 9.4x. NKT has identified
recurring synergies which will gradually contribute to an improved
financial performance starting in 2025 and are expected to be fully
realized by end 2026. Including synergies, the acquisition of
SolidAl corresponds to an EV/EBITDA multiple of 7.0x.
As part of the acquisition, NKT will invest an additional EUR
50m to expand the medium- and high-voltage capacity at the existing
site. The new production capacity is anticipated to be operational
in 2027. The acquisition, including the investment, is expected to
support NKT’s medium-term financial ambitions including delivering
RoCE above 20%.
The transaction is unconditional, and closing is effective as of
today. The acquisition was funded within the existing capital
structure. NKT remains committed to a conservative capital
structure with leverage ratio <0.0x catering for the investment
programs ongoing and enabling the high-voltage projects.
SolidAl is expected to contribute to NKT’s financial performance
from the date of closing. The contribution is expected to be in
line with 2023 and will come in addition to NKT’s 2024 financial
outlook announced in company announcement no. 3 of 21 February
2024, which remains unchanged.
Transaction overview
- Enterprise value (EV) at closing of EUR 192m
- Additional investments of EUR 50m to increase medium- and
high-voltage capacity
- SolidAl EBITDA:
- 2023: Approximately EUR 20m
- Implied EV/EBITDA transaction multiples:
- 9.4x 2023 EBITDA
- 7.0x 2023 EBITDA (incl. synergies)
- Transaction Enterprise Value: EUR 192m (~9.4x 2023 EBITDA /
~7.0x 2023 EBITDA including synergies)
Key facts about SolidAl
- 430 employees
- 1 kV-225 kV production capacity
- 70,000 m2 factory footprint
- Located 50 km north of Porto, Portugal
- Founded in 1970
- Owned by Private Equity firm, Njord Partners since 2018
Teleconference
NKT A/S hosts a teleconference for investors and financial
analysts at 12:00 pm CEST on 21 June 2024. The presentation to be
used during the call will be available before the start of the
teleconference. To attend, please register and access on
investors.nkt.com
Contact
Investor Relations: Jonas Kolby, Head of Investor Relations
(interim) +45 5370 7431 / jonas.kolby@nkt.com Press:
Louise W. Naldal,
Head of Group Communications+45 2982 0022 /
louise.westh.naldal@nkt.com
- NKT Company Announcement SolidAl - UK - Final
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