Arbonia divests the Climate Division for EUR 760 million to Midea

Arbonia AG / Key word(s): Disposal
Arbonia divests the Climate Division for EUR 760 million to Midea

18-Apr-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.

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Arbon, Switzerland, 18 April 2024 - After the conclusion of a competitive
sales process with several bidders, Arbonia has decided to divest the
Climate Division to Midea Electrics Netherlands B.V., a company of Midea
Group for an enterprise value of EUR 760 million. Subject to the approval of
relevant regulators, up to CHF 400 million of the sales proceeds are to be
returned to the shareholders after completion of the transaction. In
addition, net sale proceeds will be used to strengthen the doors business
and to reduce net debt. The doors business will strategically be further
developed both organically and through acquisitions, with the objective of
making Arbonia a European market leader for doors made of wood and glass.

Arbonia has signed an agreement to divest the Climate Division to Midea
Electronics Netherlands B.V., a subsidiary of the globally operating Midea
Group (Midea) from China, which is listed on the stock exchange. The
enterprise value of EUR 760 million corresponds to a normalised EBITDA
multiple of around 12x based on the expected EBITDA for the financial year
2024, in line with precedent transactions for the industry. It should be
noted in addition to the purchase price that, inter alia, the non-operating
real estate of the Climate Division will not be part of the transaction and
remain with Arbonia.

The Climate Division develops and produces products and systems for
sustainable heat and cold generation, heat and cold distribution, as well as
for ventilation and air filtration. The division includes the system brands
KERMI, PROLUX, SABIANA and VASCO as well as the focused brands arbonia,
Britec, Brugman, Cicsa, PZP, Solius, Superia, Tecna, and Termovent. Midea
plans to continue to invest in the Climate Division's existing sites,
employees, and R&D capabilities. These brands are therefore to remain in the
future and be further expanded.

The Clivet Group, which is also part of the Midea Group and based in the
northern Italian region of Veneto, is a leading European company in the
planning, manufacturing and sale of systems for climate, heating as well as
air renewal and purification. The company offers a wide range of solutions
for the residential, service, and industrial sectors. The combination of
Clivet Group with the Climate Division will create a European leader for
climate solutions. The combined group will develop sustainable and
innovative solutions for home comfort and energy efficiency and thus drive
forward the sustainable energy transition in the building sector. The
combined group will benefit from a complementary product portfolio, an
existing dealer and installer network, supply chain efficiencies as well as
a strategic alliance with Midea Group.

The transaction is subject to the required approvals by relevant regulators.
The closing of the transaction is expected in the second half of 2024.

Use of funds
The Board of Directors intends to distribute a part of the proceeds to the
shareholders of Arbonia AG. Following the reduction of net debt, it will
propose a distribution of around CHF 280 million in the form of a nominal
value repayment of CHF 4.00 per share as part of an Extraordinary General
Meeting. The nominal value would decrease from previously CHF 4.20 to CHF
0.20 per share as a result of the repayment. This nominal value repayment
would presumably be tax-free for the majority of Arbonia shareholders.

As announced, the Board of Directors intends to propose an ordinary dividend
payment of CHF 0.30 per share for the 2023 financial year at the
Extraordinary General Meeting; as in previous years, half of the amount
would be contributed from capital contribution reserves and the other half
from retained earnings.

Following the ordinary dividend and nominal value repayment, the Board of
Directors intends to launch a share buyback programme to reduce the share
capital by up to 6,900,000 shares (-10 % of the share capital).

Thanks to the strong balance sheet with a very high equity ratio and low net
debt after allocation of EUR 200 million to the Doors Division for both
organic and acquisition-related growth initiatives, the strategic
flexibility and development of the Doors Division is ensured.

Future orientation of Arbonia
With this transaction, Arbonia is focusing its strategy on its doors
business. The Doors Division continues to work towards the goal of expanding
its leading position as a Central and Eastern European supplier of wooden
doors and glass solutions. Based on the largely complete investment
programme for capacity and productivity increases as well as by increasing
market shares in its domestic and neighbouring target markets, the division
is aiming for above-average market growth in the future. Building on the
investments made as well as with the aid of digital solutions, the division
is positioning itself as an innovative full-range supplier. Firstly, it will
continue growing organically, and secondly, it will make acquisitions that
will help to establish a broader position both geographically and with
regards to product variety. This leads to an investment case with a
medium-term revenue target of around CHF 900 million with an EBITDA margin
of -15 % and high free cash flows. Further KPIs will follow at the Capital
Markets Day to be held before the closing of the transaction.

Advisors
Jefferies and UBS are acting as joint financial advisers, and Baker McKenzie
is acting as the legal advisor for Arbonia. Goldman Sachs is acting as
exclusive financial advisor, and Freshfields Bruckhaus Deringer LLP is
acting as legal advisor, to Midea Group.

Contact
Fabienne Zürcher
Head Corporate Communications & Investor Relations
T +41 71 447 45 54
fabienne.zuercher@arbonia.com


News Source: Arbonia AG


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End of Inside Information

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   Language:       English
   Company:        Arbonia AG
                   Amriswilerstrasse 50
                   9320 Arbon
                   Switzerland
   Phone:          +41 71 447 41 41
   E-mail:         holding@arbonia.com
   Internet:       www.arbonia.com
   ISIN:           CH0110240600
   Listed:         SIX Swiss Exchange
   EQS News ID:    1883183

End of Announcement EQS News Service
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1883183 18-Apr-2024 CET/CEST