CAMBRIDGE, ON, July 8, 2014 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX:ATA) ("ATS" or the "Company") today
announced it has entered into a definitive agreement to acquire all
shares of M+W Process Automation GmbH and ProFocus LLC,
collectively M+W PA, a leading global provider of engineering-based
automation services and solutions focused on the control,
performance monitoring and measurement of critical production
processes.
Headquartered in Germany and
established 28 years ago, M+W PA addresses the needs of a wide
spectrum of manufacturing and process-based industries including
automotive, pharmaceutical, biotechnology, chemicals, oil & gas
and food with services that include consulting, system engineering,
integration, lifecycle management, process control and
manufacturing execution systems, as well as enterprise programs,
where M+W PA acts as the main automation contractor ("MAC").
The acquisition is aligned with ATS's stated strategy of scaling
its position in the global automation market by adding to its
services and life-cycle management capabilities across several core
elements of the customer value chain. The addition of M+W PA is
expected to enhance growth opportunities in both new markets and
with existing customers.
"M+W PA's capabilities complement ATS's solutions in strategic
customer markets and open new opportunities in several attractive
industries," said Anthony Caputo,
ATS Chief Executive Officer. "We welcome M+W PA's highly skilled
people, global and local customers, high value service offerings,
scale and worldwide presence to our automation business and look
forward to continued successful collaboration with M+W Group."
M+W PA's workforce of 1,000, including approximately 750
engineers, serves customers from 51 locations in 16 countries
around the world, and is led by a highly experienced management
team based in Europe and the
U.S. As part of ATS, M+W PA is expected to continue to
enhance its portfolio, serve existing M+W PA and ATS customers and
build new customer relationships together with ATS.
"We are pleased that our automation business is becoming part of
ATS," said Dr. Olaf Berlien, CEO of
M+W Group. "ATS is ideally suited to maximize the business
area's potential for further worldwide growth. As we
will be focusing more on our core business the change of ownership
will be very beneficial both for M+W and all employees of
the automation business."
In calendar 2013, M+W PA had revenues of approximately €166
million and Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") of approximately €20 million. Over
the past three years, M+W PA's revenues have grown organically at
an average annual rate of approximately 19%. Sales by industry
segment in 2013 were 41% automotive, 26% chemicals, 13%
pharmaceuticals and biotechnology, 3% oil & gas and 17% other
industries including food and beverage, water, wastewater, consumer
care, paper, metal and semiconductor. Europe accounted for approximately 70% of
global sales, North America 27%
and Asia 3%. In calendar 2013, M+W
PA's order bookings were €188 million, and at the end of
May 2014 it had approximately €120
million of backlog.
Subsequent to the completion of the transaction, the Company
expects M+W PA to benefit from the adoption of ATS best practices
in approach to market, key account management,
front-end-of-the-business processes, performance management and
corporate strategy. M+W PA's significant capability and
market position is expected to benefit ATS and its strategy to grow
its business. The Company expects meaningful revenue synergies
through an expanded ATS offering, which will now include M+W PA's
process controls, software integration, MES, remote monitoring,
lifecycle management, modeling and simulation capabilities. M+W PA
provides an imbedded engineering, service and sales force, with
early insight into customer preferences, developments, problems and
programs, allowing M+W PA to act as first responders for
post-automation services and equipment maintenance. M+W PA is
expected to have increased opportunity to expand its MAC offering
by utilizing ATS on a subcontractor basis to address capability
gaps across a number of industries. Further, both ATS and M+W
PA are expected to have opportunities to engage customers on a more
comprehensive basis. Cost synergies are expected to be
nominal.
The purchase price based on enterprise value of approximately
€248 million (CDN $362 million at
current exchange rates) is subject to net debt and working capital
adjustments and will be funded from a new fully committed
C$600 million credit facility
underwritten by The Bank of Nova
Scotia and The Toronto-Dominion Bank to be available at
closing. With net assets of approximately $20 million, management expects that $342 million of the purchase price will be
allocated to goodwill (approximately 60% to 65%) and intangibles
(approximately 35% to 40%), subject to completion of the purchase
price allocation, which may take up to one year to complete
subsequent to transaction closing. Amortization of intangibles is
expected to be $10 million to $14
million per annum. In addition, the first six months
after acquisition will include substantially all of the
amortization of acquired backlog which is expected to be in the
$7 million to $10 million range.
On a pre-synergy basis, we expect the following:
- Dilution at the Earnings per Share ("EPS") level in the high
single digits assuming two quarters of inclusion of M+W PA's
results in fiscal 2015, due to the incremental amortization of
backlog which is not expected to continue beyond fiscal 2015;
- In fiscal 2016, EPS accretion in the high single digits;
- On a Cash Flow per Share basis, in fiscal 2015 we expect
immediate accretion, in the high single digits; and
- Cash Flow per Share accretion in fiscal 2016 is expected to be
in the mid teens.
ATS expects to complete the acquisition by the end of
September 2014, subject to customary
closing conditions, including applicable antitrust approvals.
TD Securities Inc. and Joh. Berenberg, Gossler & Ko. KG
Berenberg Bank are acting as financial advisors to ATS.
Freshfield Bruckhaus Deringer LLP and Borden Ladner Gervais
LLP are acting as legal counsel to ATS.
Conference Call and Webcast
At 10:00 a.m. eastern on Tuesday July 8, 2014, the Company will host a
webcast and an analyst conference call with follow-up question and
answer period to discuss the transaction.
The listen-only webcast can be accessed live at
www.atsautomation.com. The conference call can be accessed live
by dialing (647) 427-7450 10 minutes prior.
A replay of the presentation will be available on the ATS
website following the call. Alternatively, a telephone recording of
the call will be available for one week (until midnight
July 15, 2014) by dialing (416)
849-0833 and entering passcode 71530627 followed by the number
sign.
Notice to Readers: Forward Looking Statements:
This news release contains certain statements that constitute
forward-looking information within the meaning of applicable
securities laws ("forward-looking statements"). Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of ATS, or developments in ATS's
business or in its industry, to differ materially from the
anticipated results, performance, achievements or developments
expressed or implied by such forward-looking statements.
Forward-looking statements include all disclosure regarding
possible events, conditions or results of operations that is based
on assumptions about future economic conditions and courses of
action. Forward-looking statements may also include, without
limitation, any statement relating to future events, conditions or
circumstances. ATS cautions you not to place undue reliance upon
any such forward-looking statements, which speak only as of the
date they are made. Forward-looking statements relate to, among
other things: the enhancement of growth opportunities in new
markets and industries and with existing customers; the enhancement
of M+W PA's portfolio; the servicing by M+W PA of its existing
customers and ATS's customers and the building of new relationships
together with ATS; M+W PA benefiting from the adoption of ATS's
best practices; ATS benefiting from M+W PA's capability and market
position; revenue synergies through an expanded ATS offering; M+W
PA's increased opportunity to expand its MAC offering; ATS
and M+W PA engaging customers on a more comprehensive basis;
the funding of the purchase price through the new C$600 million credit facility and such facility
being available on closing; the amount of the purchase price that
is in excess of net assets and the portion of such excess amounts
allocated to goodwill and intangible assets; the timing of the
completion of the purchase price allocation; the amount of the per
annum amortization of intangibles; the timing of the amortization
of, and the amount of, acquired backlog; the impact on EPS
and Cash flow per share; the amount of expected depreciation and
amortization after closing; the effective tax rates of ATS;
expected timing of closing the transaction and conditions in
relation thereto. The risks and uncertainties that may affect
forward-looking statements include, among others: impact of the
global economy and general market performance including capital
market conditions and availability and cost of credit; performance
of the market sectors that M+W PA and ATS serve; foreign currency
and exchange risk; the relative strength of the Canadian dollar;
impact of factors such as increased pricing pressure and possible
margin compression; the regulatory and tax environment; failure or
delays associated with the new customer programs; that this
acquisition is not integrated as quickly or effectively as planned
or expected and, as a result, anticipated benefits and synergies
are not realized; that M+W PA's business does not perform as
expected during fiscal 2015; that amount to be allocated to
goodwill is other than as currently expected; inability to close
the acquisition, or delays in closing it, resulting from failure or
delays in relation to satisfying conditions of closing; labour
disruptions; that one or more customers, or other persons with
which M+W PA has contracted, experience insolvency or bankruptcy
with resulting delays, costs or losses; political, labour or
supplier disruptions; that we are unable to enhance growth
opportunities or M+W PA's portfolio, or expand product or service
offerings, or that customers are more difficult to engage than
expected; that the new credit facility does not become available by
closing; that the actual amounts of depreciation, amortization,
earnings per share and cash flow per share result in being
different than our estimates; risks relating to legal proceedings
to which M+W PA and/or ATS is or may become a party; exposure to
product liability claims; risks associated with greater than
anticipated tax liabilities or expenses; and other risks detailed
from time to time in ATS's filings with Canadian provincial
securities regulators. Forward-looking statements are based on
management's current plans, estimates, projections, beliefs and
opinions, and other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures:
The terms "EBITDA", "order bookings", "backlog" and "Cash Flow per
Share" do not have any standardized meaning prescribed within IFRS
and therefore may not be comparable to similar measures presented
by other companies. "Cash Flow per Share" is defined as
EBITDA less interest paid and taxes paid. For a further
description of "EBITDA", "order bookings" and "backlog" please
refer to our most recently filed management's discussion and
analysis.
About ATS
ATS Automation provides innovative, custom designed, built and
installed manufacturing solutions to many of the world's most
successful companies. Founded in 1978, ATS uses its
industry-leading knowledge and global capabilities to serve the
sophisticated automation systems' needs of multinational customers
in industries such as consumer products & electronics, energy,
life sciences and transportation. It also leverages its many years
of experience and skills to fulfill the specialized automation
product manufacturing requirements of customers. The Company's
Solar segment is classified as discontinued operations. ATS employs
approximately 2,500 people at 23 manufacturing facilities in
Canada, the United States, Europe, Southeast
Asia and China. The
Company's shares are traded on the Toronto Stock Exchange under the
symbol ATA. Visit the Company's website at
www.atsautomation.com.
About M+W Group
M+W Group, with headquarters in Stuttgart, Germany, is one of the leading
global companies in the field of high-tech engineering, procurement
and construction ("EPC"). From concept development to turnkey
solutions, the Group manages projects of all sizes for many
industries. Founded in 1912, the company is recognized today as a
market leader in several segments, such as the semiconductor and
photovoltaic industries. In 2013 M+W Group generated an order
intake of 3.03 billion euros and
revenues of 2.56 billion euros. More
information: www.mwgroup.net.
SOURCE ATS Automation Tooling Systems Inc.