Savaria Corporation (TSX:SIS) (“Savaria” or the “Company”), a
global leader in the accessibility industry, is pleased to announce
that it has made a recommended cash offer to acquire all the issued
and outstanding shares of Handicare Group AB (STO:HANDI)
(“Handicare”) for SEK50.00 per share (the “Offer”), representing a
total consideration to Handicare shareholders of SEK2.9 billion
(CAD452.3 million) and a total enterprise value (including leases)
of SEK3.4 billion (CAD521.1 million). The price of the Offer is
final and will not be increased. The terms and conditions of the
Offer, which are directed only to shareholders in permitted
jurisdictions, have been announced in a separate press release.
The board of Handicare has confirmed to Savaria
that it has unanimously decided to recommend that Handicare’s
shareholders accept the Offer. The recommendation is supported by
an opinion from PWC Sverige according to which the Offer is fair to
Handicare’s shareholders from a financial point of view. The
largest shareholder of Handicare, Cidron Liberty Systems S.à
r.l.(1), holding 62.9% of the shares and votes in Handicare, has
informed Savaria that it supports the Offer and that it intends to
accept the Offer. Nordic Capital Fund VII will enter into an
undertaking to that effect once Handicare has announced its
year-end report 2020 on February 4th, 2021, in light of the
currently applicable restrictions under the EU Market Abuse
Regulation. Furthermore, Nordic Capital Fund VII has undertaken
towards Savaria not to sell its shares in Handicare without
Savaria’s prior approval. The undertaking to not sell its shares
applies until May 31st, 2021 and will terminate upon the entering
into of an irrevocable undertaking to accept the Offer. If
successful, the Offer is expected to be completed before the end of
April 2021.
Handicare provides mobility solutions to
increase the independence of physically challenged or elderly
people. The company manufactures and sells curved and straight
stairlifts, transfer, lifting and repositioning aids, and vehicle
accessibility products. Handicare is a global company with sales in
approximately 40 countries and has primary manufacturing locations
in the United Kingdom, the Netherlands, the United States, and
China. For the fiscal year ended December 31, 2020, Handicare
reported preliminary sales of EUR205 million (CAD317 million) and
adjusted EBITDA(2) of EUR24 million (CAD37 million). The successful
completion in 2020 of the structural cost reduction initiatives as
part of Handicare’s “Lift Up” program contributed to the overall
improvement in profitability.
“It has long been my vision to build a company
that would serve a global market. People throughout the world are
aging and in need of equipment that gives them independence and
ways to stay in their homes longer. In our discussions with
Handicare, it is clear we have a shared vision and mission. Their
strong stairlift portfolio, sophistication of manufacturing and
market reach provides an exceptional complement to our
business.
(1) Cidron
Liberty Systems S.à r.l. is an entity ultimately controlled by
Nordic Capital VII Limited, acting in its capacity as general
partner to Nordic Capital VII Alpha, L.P. and Nordic Capital VII
Beta, L.P. together with associated investment vehicles ("Nordic
Capital Fund VII"). (2) Non-IFRS
measures. These measures are defined in the “Non-IFRS Measures”
disclaimer below.
I look forward to welcoming the employees of
Handicare and their divisions which have sister segments in
Savaria; patient handling and Span, Savaria/Garaventa Lift with
Handicare stairlifts and our automotive group with Handicare’s
adapted vehicles. We will have greater strength together and Stay
at Home™ with Savaria will include Handicare products, our
worldwide theme, assuming completion of the acquisition.
Together, we will be well-positioned to become a
world-leading company to answer the needs of this growing market. I
thank our employees for their dedication to Savaria, particularly
through the challenges of COVID-19 and I also wish to thank our
Board of Directors and our team of advisors. Welcome Caisse de
dépôt et placement du Québec (CDPQ) as a major shareholder of
Savaria – I see the potential for a long-term relationship with
this flagship investor.”, commented Marcel Bourassa, President and
Chief Executive Officer of Savaria.
“We are delighted to support the international
expansion strategy of Savaria, a Québec manufacturer that has
recorded significant growth over the years. With the acquisition
announced today, the company will join the ranks of global leaders
in its industry, with significant market share in North America and
Europe and a wide range of products,” said Kim Thomassin, Executive
Vice-President and Head of Investments in Québec and Stewardship
Investing at CDPQ.
STRATEGIC RATIONALE
- Enables Savaria
to become a global leader in the accessibility industry, with
approximately 2,300 employees across the world, and proforma
combined preliminary reported revenues of over CAD671(1) million
and adjusted EBITDA of CAD96 (1,2) million.
- Represents a
unique opportunity for Savaria to acquire a top stairlift
manufacturer, producing over 45,000 stairlifts annually, bringing
an innovative new product line to complement its elevator and
wheelchair platform lift portfolio.
- Highly
complementary product offering provides for significant
cross-selling opportunities for both the Accessibility and Patient
Handling segments across a combined network of over 1,000 dealers
and 30 direct sales offices worldwide.
-
Along with its extensive dealer network, the proposed acquisition
adds commercial operations in the UK and Netherlands to complement
Garaventa Lift’s direct sales footprint in Switzerland, Italy,
Germany, Poland, and the Czech Republic, providing a tremendous
platform for promoting the Vuelift in Europe.
-
Savaria’s Patient Handling business can leverage Handicare’s
extensive North American sales and installation network, especially
in the acute care setting, which is highly complementary to
Span-America’s long-term care focus. This segment would have a
proforma combined preliminary revenue base of over CAD140(1,3)
million and a full portfolio of safe patient handling solutions
comprising lifts, slings, bed frames and pressure treatment
surfaces.
- Enhances
Savaria’s footprint by 300,000 sq. ft. through the addition of
facilities in the U.S., Canada, the U.K., the Netherlands, and
China, representing total square footage of approximately 950,000
sq. ft. of production related capacity.
- Gain
efficiencies by leveraging best practices in technology and factory
automation through shared resources and joint R&D initiatives,
bolstered by a combined R&D staff of over 50 persons.
-
Annual savings from the full contribution of Handicare’s “Lift Up”
program and the expected synergies from the acquisition are
estimated at CAD18(4) million and expected to be achieved within 24
months of transaction close, with the full impact of the “Lift Up”
program to be realized in 2021 and 50% of the synergies to be
realized over the first twelve months.
(1)
Preliminary figures reported today for the financial year ended
December 31, 2020. (2) Non-IFRS measures.
These measures are defined in the “Non-IFRS Measures” disclaimer
below. (3) Percentages based on YTD
audited financials as at 30-Sept-2020.
(4) Forward looking statements. Please refer to the
“Forward-Looking Statements” disclaimer below.
FINANCIAL HIGHLIGHTS
-
Proposed acquisition of Handicare for an enterprise value
(including leases) of SEK3.4 billion (CAD521.1 million) represents
a 12.1x multiple of Handicare’s preliminary 2020 adjusted
EBITDA(1,2), including the full anticipated impact of Handicare’s
“Lift Up” program(3), and 9.6x including the additional benefits of
expected transaction’s run-rate synergies.(3)
-
Provided that the Offer is successful, the acquisition will be
immediately accretive to Savaria’s pro forma combined 2020 free
cash flow per share(2) (including the full anticipated impact of
Handicare’s “Lift Up” program(3)), with accretion increasing to
over 20% when including the expected transaction run-rate
synergies.(3)
-
Transaction is intended to be funded through a combination of
Savaria’s new credit facilities of CAD600 million, including an
equity bridge of CAD200 million, and CAD160 million private
placements of subscription receipts (at a price of CAD15.00 per
subscription receipt).
-
Net debt (including leases) to pro forma adjusted EBITDA ratio at
closing expected to be at 3.6x(2,3) (including the full anticipated
impact of Handicare’s “Lift Up” program but excluding expected
transaction synergies) with the combined company being in a
position to generate attractive cash flows while providing
liquidity to support operations, and allowing for timely
deleveraging.
(1)
Preliminary figures reported today for the financial year ended
December 31, 2020. (2) Non-IFRS
measures. These measures are defined in the “Non-IFRS Measures”
disclaimer below. (3) Forward
looking statements. Please refer to the “Forward-Looking
Statements” disclaimer below.
ACQUISITION FINANCING
The acquisition and other related transaction
costs are to be funded through a combination of new credit
facilities and equity private placements of subscription receipts
(together the “Equity Private Placements”) with details as
follows:
New Credit Facilities: Savaria
has secured CAD600 million in new committed credit facilities
(including an equity bridge, of CAD200 million, which is planned to
be replaced by the proceeds from the Equity Private Placements).
National Bank of Canada has committed to underwrite 100% of the new
credit facilities.
Bought Deal Private Placement of
Subscription Receipts: Savaria has entered into an
agreement with a syndicate of underwriters (the "Underwriters"),
with National Bank Financial Inc., Desjardins Capital Markets,
Scotiabank, and TD Securities Inc. acting as Co-Bookrunners on
behalf of the syndicate. As per the agreement, the Underwriters
have undertaken to purchase 6,667,000 subscription receipts
(the “Subscription Receipts”) of the Company on a bought deal basis
at a price of CAD15.00 per Subscription Receipt (the “Issue Price”)
for gross proceeds to Savaria of approximately CAD100 million (the
"Equity Issuance"). The Subscription Receipts will be offered by
way of private placement to accredited investors and other exempt
purchasers in all provinces of Canada.
Concurrent Private Placement of
Subscription Receipts to CDPQ: Concurrently with the
Equity Issuance of Subscription Receipts, the Caisse de dépôt et
placement du Québec (“CDPQ”) has agreed to purchase 4,000,000
Subscription Receipts, at the same Issue Price and terms as the
Equity Issuance, for gross proceeds to Savaria of CAD60
million.
Savaria has agreed to grant the Underwriters and
CDPQ over-allotment options to purchase, in total, up to an
additional 1,600,050 Subscription Receipts at the Issue Price,
exercisable in whole or in part, at any time and from time to time
on or prior to the date of the closing of the Equity Private
Placements. If the over-allotment options are exercised in full, an
additional CAD24 million in gross proceeds will be raised pursuant
to the Equity Private Placements and the aggregate gross proceeds
of the Equity Private Placements will be CAD184 million.
All Subscription Receipts issued will be subject
to a four month hold period under applicable securities laws in
Canada. The completion of each of the Equity Private Placements is
contingent upon the concurrent completion of the other. The
completion of the Equity Private Placements is also subject to the
approval of the Toronto Stock Exchange and other customary closing
conditions and is expected to close on February 19, 2021.
The Subscription Receipts will entitle the
holder to receive one common share of Savaria (each a “Common
Share”) for no additional consideration and without any further
action upon the successful completion of the acquisition of
Handicare. The gross proceeds of the Equity Private Placements
(less 50% of the underwriting fee and expenses of the Equity
Issuance) will be deposited in separate escrows with Computershare
Trust Company of Canada to be released to Savaria once the
conditions to the Offer have been satisfied. The holders of
Subscription Receipts will also receive upon conversion of the
Subscription Receipts for Common Shares, in the form of a special
interest payment, an amount equal to any dividends declared by
Savaria and payable to holders of Common Shares of record as of
dates from and including the closing date of the Equity Private
Placements to but excluding the date of the conversion of
Subscription Receipts into Common Shares. Should the conditions to
the Offer not have been satisfied by September 30th, 2021 or the
Offer lapse, terminate or be revoked or withdrawn in accordance
with its terms prior to September 30th, 2021, the gross proceeds of
the Equity Private Placements will be returned to holders of
Subscription Receipts with interest.
The Subscription Receipts and the common shares
of Savaria have not been, and will not be, registered under the
U.S. Securities Act or the securities laws of any state of the
United States, and may not be offered, sold or delivered, directly
or indirectly, within the United States, except in certain
transactions exempt from, or not subject to, the registration
requirements of the U.S. Securities Act and applicable state
securities laws. This press release does not constitute an offer to
sell or a solicitation of an offer to buy any of these securities
within the United States.
CONDITIONS TO THE
ACQUISITION
Completion of the acquisition of Handicare is
conditional upon the Offer being accepted to such extent that
Savaria becomes the owner of shares representing more than 90 per
cent of the total number of outstanding shares in Handicare and
other regulatory and customary conditions. The Offer will not be
completed at a lower level of acceptance.
PRELIMINARY RESULTS FOR Q4 AND FULL YEAR
2020
In the context of today’s announcement, Savaria
is announcing its preliminary financial results for the fourth
quarter and full year 2020.
For the fourth quarter, revenue is expected to
be approximately CAD90 million, representing a decrease of
approximately 6% from the same period in 2019, while adjusted
EBITDA(1) is expected to increase by approximately 5% to reach
approximately CAD16 million, compared with CAD15 million in the
fourth quarter of 2019.
For the full year 2020, revenue is expected to
be approximately CAD354 million, representing a decrease of
approximately 5% from the full year 2019, while adjusted EBITDA(1)
is expected to increase by approximately 7% to reach approximately
CAD59 million, compared with CAD56 million for the full year
2019.
Management’s expectations with respect to these
preliminary results are based on information available to Savaria
as of the date of this release and are subject to the completion of
financial closing procedures, final adjustments and other
developments that may arise between now and the time Savaria’s
quarterly and 2020 year-end consolidated financial statements are
finalized. It is possible that final reported results may not be
what is currently expected. These preliminary results should be
read in conjunction with the “Forward-Looking Statements” section
below and is subject to the risks and uncertainties summarized
therein, which are more fully described in Savaria’s public
disclosure documents. Financial results for the fourth quarter and
financial year ended December 31, 2020 will be reported on March
24, 2021.
(1)
Non-IFRS measures. These measures are defined in the “Non-IFRS
Measures” disclaimer below.
FINANCIAL AND LEGAL
ADVISORS
National Bank Financial Inc. is acting as
financial advisor and Hannes Snellman Attorneys Ltd. is acting as
legal counsel to Savaria on the acquisition. Blake, Cassels &
Graydon LLP is acting as legal counsel to Savaria on the Equity
Private Placements while Norton Rose Fulbright Canada LLP is acting
as legal counsel to the Underwriters on the Equity Issuance and
Lavery, de Billy LLP is acting as legal counsel to CDPQ on its
concurrent purchase of Subscription Receipts.
CONFERENCE CALL
Savaria will host a conference call to discuss
the Offer today on January 27th, 2021 at 5:30 p.m. (Eastern
Standard Time). To attend the conference call, dial: 877 308 9605 /
Reservation #: 21990440. Additional information on the proposed
transaction is available at Savaria’s website at
www.savaria.com/our-company/investors. For those unable to attend,
a replay will be available within 2 hours following the call at 800
558 5253 / Reservation #: 21990440.
ABOUT SAVARIA CORPORATION
Savaria Corporation is one of the global leaders
in the accessibility industry. It provides accessibility solutions
for the physically challenged to increase their comfort, mobility,
and independence. Its product line is one of the most comprehensive
on the market. Savaria designs, manufactures, distributes, and
installs accessibility equipment, such as stairlifts for straight
and curved stairs, vertical and inclined wheelchair lifts, and
elevators for home and commercial use. It also manufactures and
markets a comprehensive selection of pressure management products
for the medical market, medical beds for the long-term care market,
as well as an extensive line of medical equipment and solutions for
the safe handling of patients. In addition, Savaria converts and
adapts vehicles to be wheelchair accessible. The Company operates a
sales network of dealers worldwide and direct sales offices in
North America, Europe (Switzerland, Germany, Italy, Czech Republic,
Poland, and United Kingdom), Australia, and China. Savaria employs
approximately 1,400 people globally and its plants are located
across Canada in Laval and Magog (Québec), Brampton, Beamsville and
Toronto (Ontario), and Surrey (British Columbia), in the United
States at Greenville (South Carolina), in Huizhou (China), in Milan
(Italy), and in Newton Abbot (United Kingdom).
ABOUT HANDICARE
Handicare offers solutions to increase the
independence of disabled or elderly people, and to facilitate for
their care providers and family. The offering encompasses a
comprehensive range of curved and straight stairlifts, transfer,
lifting and repositioning aids and vehicle adaptations. Handicare
is a global company with sales in some 40 countries and is one of
the market leaders in this field. Its head office is in Stockholm,
Sweden and manufacturing and assembly is located at four sites
distributed across North America, Asia, and Europe.
ABOUT CAISSE DE DÉPÔT ET PLACEMENT DU
QUÉBEC
Caisse de dépôt et placement du Québec (CDPQ) is a long-term
institutional investor that manages funds primarily for public and
parapublic pension and insurance plans. As at June 30, 2020,
it held CAD 333.0 billion in net assets. As one of
Canada’s leading institutional fund managers, CDPQ invests globally
in financial markets, private equity, infrastructure, real estate
and private debt. For more information, visit cdpq.com, follow us
on Twitter @LaCDPQ or consult our Facebook or
LinkedIn pages.
FORWARD-LOOKING STATEMENTS
This press release includes certain statements
that are “forward-looking statements” within the meaning of the
securities laws of Canada. Any statement in this press release that
is not a statement of historical fact may be deemed to be a
forward-looking statement. When used in this press release, the
words “believe”, “could”, “should”, “intend”, “expect”, “estimate”,
“assume” and other similar expressions are generally intended to
identify forward-looking statements. Forward-looking statements
also include, but are not limited to, the statements regarding the
Offer and its expected impact on the Company, the Equity Private
Placements and the receipt of regulatory approvals. It is important
to know that the forward-looking statements in this document
describe the Company’s expectations as at the date hereof, which
are not guarantees of future performance of Savaria or its industry
and involve known and unknown risks and uncertainties that may
cause Savaria’s or the industry’s outlook, actual results, or
performance to be materially different from any future results or
performance expressed or implied by such statements. The Company’s
actual results could be materially different from its expectations
if known or unknown risks affect its business, or if its estimates
or assumptions turn out to be inaccurate. A change affecting an
assumption can also have an impact on other interrelated
assumptions, which could increase or diminish the effect of the
change. As a result, the Company cannot guarantee that any
forward-looking statement will materialize and, accordingly, the
reader is cautioned not to place undue reliance on these
forward-looking statements. Forward-looking statements do not take
into account the effect that transactions or special items
announced or occurring after the statements are made may have on
the Company’s business. For example, they do not include the effect
of sales of assets, monetizations, mergers, acquisitions, other
business combinations or transactions, asset write-downs or other
charges announced or occurring after forward-looking statements are
made.
Unless otherwise required by applicable
securities laws, Savaria disclaims any intention or obligation to
update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise. The
foregoing risks and uncertainties include the risks set forth under
“Risks and Uncertainties” in Savaria’s latest Annual MD&A as
well as other risks detailed from time to time in reports filed by
Savaria with securities regulators in Canada.
NON-IFRS MEASURES
The information appearing in this press release
has been prepared in accordance with IFRS. However, Savaria uses
adjusted EBITDA, EBITDA and free cash flow for analysis purposes to
measure its financial performance. These measures have no
standardized definitions in accordance with IFRS and are therefore
regarded as non-IFRS measures. These measures may therefore not be
comparable to similar measures reported by other companies.
- Adjusted EBITDA
is defined by Savaria as EBITDA before other net expenses (income)
and stock-based compensation expense.
- EBITDA is
defined by Savaria as earnings before net finance costs, income tax
expense and depreciation and amortizations.
- Free cash flow
is defined by Savaria as adjusted EBITDA less taxes, investments in
working capital, capital expenditures, lease payments, and
interest.
Additional details regarding Savaria’s non-IFRS
measures can be found in Savaria’s MD&A, which is posted on
Savaria’s website at www.savaria.com, and filed with SEDAR at
www.sedar.com.
Similarly, Handicare uses adjusted EBITDA,
EBITDA and Other specified items for analysis purposes to measure
its financial performance. These measures have no standardized
definitions in accordance with IFRS and are therefore regarded as
non-IFRS measures. These measures may therefore not be comparable
to similar measures reported by other companies.
- Adjusted EBITDA
is defined by Handicare as EBITDA excluding Other specified
items.
- EBITDA is
defined by Handicare as earnings before interest, tax, depreciation
and amortization.
- Other specified
items is defined by Handicare as transaction costs, integration
costs, restructuring costs, IPO costs, recall costs and other
efficiency projects.
Additional details regarding Handicare’s
non-IFRS measures can be found in Handicare’s 2019 Year-end report,
which is posted on Handicare’s website at
www.handicaregroup.com.
FOR ADDITIONAL INFORMATION, PLEASE
CONTACT:
Marcel BourassaPresident and Chief Executive
OfficerSavaria Corporationmbourassa@savaria.com
Stephen ReitknechtChief Financial
OfficerSavaria Corporationsreitknecht@savaria.comPhone: 1 (800)
661-5112
Nicolas RimbertVice President, Corporate
DevelopmentSavaria Corporationnrimbert@savaria.comPhone: 1 (450)
254-0115
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