SFC Energy AG: next strategic step towards systems supplier, forward integration and expansion into North-American oil & gas market by acquiring Simark Controls Ltd.
SFC Energy AG / Key word(s): Acquisition/Change in Forecast
05.07.2013 / 00:05
Acquisition Highlights and Rationale
- Major growth potential through direct market access: For 40 years, Simark is an established value added reseller (VAR) in the strongly growing Canadian oil & gas industry, one of the fastest growing market segment for SFC energy solutions
- Strengthened system solution competence: Simark's product integration and manufacturing expertise complements SFC's product portfolio
- Stabilized business portfolio: increased share of Industry business and reduced dependence on cyclical Consumer market and low predictability Defense market
- Growth leap and earnings contribution from acquisition expected starting September 2013
- Direct access into the dynamic North-American oil & gas market for SFC's environmentally friendly fuel cells and energy solutions
- Calgary site to be established as competence centre for oil & gas solutions
Brunnthal/Munich, Germany, July 4, 2013 - SFC Energy AG, a market leader for off grid power generation and stationary power distribution, today signed a contract to acquire Simark Controls Ltd. (Simark), a Canadian value added (VAR) distributing company with product integration and manufacturing expertise for power products, instrumentation, and automation. This forward integration is a further important step in implementing SFC's strategy as a systems provider.
About Simark Controls Ltd.
Simark has approx. 70 employees and is a service oriented, 'Value Added Distributing Company' specializing in the Sales and Service of high quality instrumentation, automation and power products. Simark provides instrumentation and measurement systems, power components and drives, security and surveillance equipment for various applications in the oil & gas industry as well as in the mining, forestry and community supply markets. Incorporated in 1971, Simark Controls' head office and production facilities are located in Calgary, Alberta. Sales and service offices located in Edmonton, Alberta; Saskatoon, Saskatchewan and Vancouver, British Columbia.
In financial year 2012 Simark generated revenues (excluding commissions and service revenues) of approx. EUR 20.2 million (CAD 27.3 million) (2011: approx. EUR 17.5 million (CAD 23.6 million)). For 2013 revenues of EUR 20 to 23 million are expected.
Terms of Transaction
The net purchase price payable for all Simark shares is up to approx. EUR 18.52 million (CAD 25.00 million), consisting of a cash component of approx. EUR 12.04 million (CAD 16.25 million payable in cash at closing of the transaction, of which CAD 4.125 will be financed by a Canadian commercial bank and the remainder from the SFC Group's existing cash resources), a SFC share component of approx. EUR 2.78 million (CAD 3.75 million) and another cash component of up to approx. EUR 3.70 million (CAD 5.00 million), which will be paid from 2014 to 2016 in three yearly instalments each up to approx. EUR 1.23 million (CAD 1.67 million) - depending on incidence or absence of certain events.
In the context of the SFC share component, Simark's shareholders will receive approx. 518,000 new SFC shares arising from the Company's existing authorized capital. The shares will be valuated at EUR 5.39, which is the volume weighted average share price of the past 60 days plus a 5% premium. The shares are subject to a de facto lock-up until 2015. The transaction is expected to be completed (Closing) within the third quarter of 2013.
Using Simark's strong sales and service organization SFC intends to accelerate its market penetration into the attractive North American oil & gas industry. Combining Simark's direct market access with the existing SFC partner structure, current growth rates shall be even surpassed. Further regional expansion of the business into the U.S. should yield additional growth opportunities.
SFC's environmentally friendly, low carbon footprint energy solutions are mainly used to power instrumentation as well as surveillance and security applications (SCADA) in the oil & gas industry today. Utilizing a joint sales and service organization for the entire product offering shall generate significant synergies.
Simark's product integration and manufacturing capabilities will enable the Group to develop and manufacture market specific solutions which contain SFC fuel cells and PBF power supplies in the second phase of integration.
Furthermore it is intended to integrate SFC's non-government business in North America into the new joint organization and run it out of Calgary as the regional headquarters.
The planned aggregate pro-forma revenues 2013 of the new SFC Group will amount to approx. EUR 50 to 55 million; of which about 75% will be generated with industrial customers. This will further reduce SFC's dependence on the cyclical Consumer market and offset the low predictability of the Defense market.
Canada has the third largest oil reserves in the world, after Saudi Arabia and Venezuela. More than 95% of these reserves are located in the province of Alberta. In 2012 the capital expenditure in this CAD 100 billion industry amounted up to CAD 25 billion. A high single digit growth rate is expected for the upcoming years in a politically and economically stable environment.
The high demand for off-grid energy solutions combined with challenging climatic boundary conditions, have been the basis for consistent growth for SFC's environmentally friendly energy solutions. This market segment has become one of the fasted growing businesses of SFC.
The current Simark shareholders will continue to provide the leadership of Simark within SFC Group.
Experienced SFC managers will complement the leadership and drive a successful integration together with the current Simark team. Together they will insure the further growth of the non-government business in North America.
'We are excited to become part of a leading and well capitalized provider of environmentally friendly power solutions such as SFC Group,' says Mark Wheeler, President and main shareholder of Simark Controls. 'Combining our long-term experience gained over the last decades and the tremendous know-how we will now be able to offer highly efficient, customized complete solutions to users worldwide.'
'The acquisition of Simark Controls Ltd is a logical next step in implementing SFC's strategy and a landmark deal for our company at the same time. We are gaining direct access to our fastest growing market segment (oil & gas) and again we are significantly enlarging system solution capabilities within SFC Group. The third asset is a top class team of highly experienced entrepreneurs and managers who are joining us. I'm truly thrilled about the Simark team coming onboard. Together we will establish the competence centre for the oil & gas industry in Calgary', says Dr. Peter Podesser, CEO of SFC Energy AG.
Advisors and Counsel
FCF Fox Corporate Finance, Munich, Freshfields Bruckhaus Dehringer, Hamburg, and Blake, Cassels & Graydon LLP, Calgary acted as advisors to SFC. For Simark, Scotiabank Mid-Market Capital Advisors, Toronto and Bennett Jones LLP, Calgary acted as advisors.
About SFC Energy AG
SFC Energy AG (www.sfc.com) is a market leader for off grid and stationary power generation and distribution. With approx. 27,000 fuel cells sold the Company has successfully and globally established fully commercialized and award winning products in the Consumer, Industry, and Defense & Security markets for many years. Equally successfully, the group develops, produces and globally distributes higher level power management components, e.g. converters and switched mode power supplies. The products increasingly are delivered as power supply system solutions according to customer requirements. SFC is DIN ISO 9001:2008 certified. The Company is based in Brunnthal/Munich, Germany, and operates facilities in the Netherlands and Romania, and a sales organization in the U.S. SFC Energy AG is listed at the Deutsche Boerse Prime Standard (WKN: 756857 ISIN: DE0007568578).
SFC Investor Relations and Press Contact:
Barbara von Frankenberg
Head of IR and PR
SFC Energy AG
Tel. +49 89 673 592-378
Fax. +49 89 673 592-169
Email: [email protected]
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Language: English Company: SFC Energy AG Eugen-Saenger-Ring 7 85649 Brunnthal Germany Phone: +49 (89) 673 592 - 100 Fax: +49 (89) 673 592 - 169 E-mail: [email protected] Internet: www.sfc.com ISIN: DE0007568578 WKN: 756857 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, München, Stuttgart
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