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Johan Molin, President & CEOTomas Eliasson, CFO
Cash offer for Cardo
Forward-looking StatementsInformation set forth in this presentation may contain forward-looking statements. These statements are not guarantees of futureperformance and are subject to inherent risks and uncertainties. Forward-looking statements include, but are not limited to, statements about the expected future business of ASSA ABLOY AB resulting from and following the offer. These statements reflect ASSA ABLOY AB’s current expectations based upon information currently available to it and are subject to various assumptions, as well as risks and uncertainties that may be outside of the control of ASSA ABLOY AB, including but not limited to the effect of changes in general economic conditions, the level of interest rates, fluctuations in product demand, competition, technological change, employee relations, planning and property regulations, natural disasters and the potential need for increased capital expenditure (such as resulting from increased demand, new business opportunities and deployment of new technologies). Actual results could differ materially from those expressed or implied in such forward-looking statements. Any such forward-looking statements speak only as of the date on which they are made and ASSA ABLOY AB has no obligation (and undertakes no such obligation) to update or revise any of them.
Offer RestrictionsThe offer is not being made to persons whose participation in the offer requires that an additional offer document is prepared or registration effected or that other measures are taken in addition to those required under Swedish law. In particular, the offer is not being made, directly or indirectly, by use of mail or any other means or instrumentality in or into Australia, Canada, Japan, New Zealand or South Africa, and the offer cannot be accepted by any such use, means, instrumentality or facility of, or from within Australia, Canada, Japan, New Zealand or South Africa. Accordingly, this presentation and any related offer documentation are not being and should not be mailed or otherwise distributed, forwarded or sent in or into Australia, Canada, Japan, New Zealand or South Africa.
Additional InformationFor full information on the terms of the offer, the contents of and background to the offer and the offer restrictions, please refer to the offer announcement.
Investor presentation disclaimers
Cash offer for Cardo
ASSA ABLOY has reached agreements with the largest shareholders of Cardo, representing 63.6% of the shares, to acquire their shares in Cardo
A public offer is announced today with SEK 420 per share for the remaining shares
The Board of Directors of Cardo has unanimously recommended the offer
Cardo Entrance Solutions is a good fit with ASSA ABLOY’s division Entrance Systems and together they will be able to offer a complete range of products within Entrance Automation
ASSA ABLOY will investigate strategic options for Cardo’s other operations which do not fit in with ASSA ABLOY’s long term strategy, including a potential divestment
Strategic rationale
The acquisition is a step in ASSA ABLOY’s strategic ambition to grow the entrance automation business
The acquisition strengthens ASSA ABLOY’s product offering – as a leading supplier of complete solutions within Entrance Automation
ASSA ABLOY leverages its global organization and distribution network to expand and further develop the operations in Cardo Entrance Solutions
Large synergies in sales, services and product offering, but also cost synergies within manufacturing, purchasing, distribution
Cardo Entrance Solutions constitutes a platform for further growth in the broader entrance automation space
Future Entrance Systems division
Entrance SystemsSales BSEK 8.8
EBIT 12.5%
Ditec/EntrematicIndirect
Industrial doorsDirect
Automatic doorsDirect
Sales BSEK 0.9
EBIT 8%
(Ditec and Entrematic)
Sales BSEK 4.6
EBIT 11%1)
(Cardo)
Sales BSEK 3.3
EBIT 17%
(Entrance Systems)
(Agta Record Sales 2.0 BSEK, 38%)
1) Adjusted for items affecting comparability of BSEK 0.1
ASSA ABLOY Entrance Systems in brief
Sales of 4,200 MSEK
2,800 employees
Sales companies in about 30 countries
Authorized distributors in more than 50 countries
Production/assembly in Sweden, Czech Republic, Italy, Portugal, Korea, China, USA and Canada
Headquarters in Landskrona, Sweden
Besam ABBesam DenmarkBesam Great BritainBesam GermanyBesam AustriaBesam NetherlandsBesam USABesam FranceNJAD (USA-distributor)Besam Sweden (Sales)Besam FinlandBesam SingaporeBesam SwitzerlandBesam Security …Besam MalaysiaBesam ItalyBesam SpainBesam BelgiumEntré-Matic ABBesam HungaryBesam Czech RepublicFaiveley, FranceBesam JapanBesam PolandBesam PortugalBesam RussiaBesam Production ABBesam Export ABBesam AustraliaBesam ChinaBesam SlovakiaEntreMatic ABBesam CanadaDoormanBesam New ZeelandBesam HongKongBesam KoreaBesam NorwayBesam South AfricaBesam CheilBesam PortugalAAES Turkey …
0
250
500
750
1000
1250
1500
1750
2000
2250
2500
2750
3000
3250
3500
Sales MSEK
Swing Doors
Sliding Doors
Revolving Doors
Service Sales
ASSA ABLOY Entrance SystemsA true success story Ditec
Agta Record
Roller Shutters
Entrance Control
Traffic &Vehicle
The Acquisition of Ditec 2009 moved ASSA ABLOY into Entrance Automation
Industrial Doors
RollerShutters
WindowAutomation
PedestrianDoors
Entrance Control
Traffic&Vehicle
Entrance Automation
Market
Entrance Automation
Market
Before Going forward
IndustrialDoors
PedestrianDoors
WindowAutomation
Expansion in two dimensions: direct & indirect business
Acquisitions to complement direct selling model
End-user focus– System sales, customized solutions– Service
Global key accounting
Geographical gaps
Directmodel
Indirectmodel
Acquisitions to complement distributor sales channel
Distribution market focus– Fill product gaps– Geographical/market expansion
Strategic rationale Recent cases
Entrance Automation shows attractive growth & returns
Automatic Doors
Industrial doors
Gate automation Total
Market size € ~2-2.5 bn € ~8-10 bn € ~3-4 bn € ~15bn
Of which Europe
€ ~1 bn € ~5-6 bn € ~1.5-2 bn € ~8-9 bn
Observed growth rates
-5 to +10% -25 to +15% -10 to +25%
Typical EBITDA marg
5-20% 5-15% 10-25%
Cardo is a leading supplier of industrial doors and logistics systems, wastewater treatment systems, process equipment for the pulp and paper industry and garage doors
8,100 MSEK
Sales 4.6 BSEKEBIT 11%1)
Service share 45%
3.2 BSEK 0.3 BSEK
1) Adjusted for items affecting comparability of BSEK 0.1
ASSA ABLOY Entrance Automation Products for all door opening applications
Commercial applications
Residential applicationsIndustrial applicationsSwing Doors
Revolving Doors
EntranceIndustrial Doors
Garage Doors
Garage Doors
Garage Doors
Sliding Doors
Sliding Doors
Service operations
Large service synergies
Global key accounting
Complete service offering
More than 2,000 mobile technicians
45% of turnover aftermarket related
Bolt on service companies
Large potential in emerging markets
Cardo going forward
Intention is to grow and develop Cardo’s business
Global key accounting and bolt on service
Increase investments in R&D, new products
The company has gone through the recession in a good way and is now ready for growth
ASSA ABLOY always make use of talent and management in acquired companies
Future Entrance Systems division
Entrance SystemsSales BSEK 8.8
EBIT 12.5%
Ditec/EntrematicIndirect
Industrial doorsDirect
Automatic doorsDirect
Sales BSEK 0.9
EBIT 8%
(Ditec and Entrematic)
Sales BSEK 4.6
EBIT 11%1)
(Cardo)
Sales BSEK 3.3
EBIT 17%
(Entrance Systems)
(Agta Record Sales BSEK 2.0, 38%)
1) Adjusted for items affecting comparability of BSEK 0.1
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Tomas Eliasson, CFO
Financing & time table
Financial effects for ASSA ABLOY
BSEK 2009 Jan-Sep 2010 2009 Jan-Sep
2010 2009 Jan-Sep 2010
Sales 35.0 27.2 8.8 5.6 43.8 32.8
EBIT 5.41) 4.4 0.82) 0.53) 6.24) 4.94)
EBIT margin (%) 15.5 16.3 8.7 8.3 14.1 15.0
Net Debt 11.0 10.9 0.2 0.1 22.65) 22.35)
Average no. of employees 29,375 37,249 5,599 5,337 34,974 42,586
CombinedCardoASSA ABLOY
1) Excluding items affecting comparability of approximately BSEK 1.02) Excluding items affecting comparability of approximately BSEK 0.23) Excluding items affecting comparability of approximately BSEK 0.14) Not adjusted for amortizations of any excess value that arises in connection with the acquisition5) Combined net debt for both companies at end of period including total offer consideration for 100% of the shares in Cardo
FinancingFinancing
Committed bridge facility from SEB of BSEK 14 done
BSEK 14 bridge to be resettled during 2011, mainly on capital markets
Covers Cardo and other acquisitions
Key ratios
Total net debt BSEK 22.31) and gearing around 110%
Net debt / LTM EBITDA 2.82)
Equity ratio 36%
Key debt ratios will improve fast due to strong and stable cash flow
1) Combined net debt for both companies at end of period including total offer consideration for 100% of the shares in Cardo2) EBITDA adjusted for items affecting comparability of BSEK 1
The offer
Offer price of SEK 420 per share
The total value of the offer amounts to approximately BSEK 11.3– Premium of 48 percent compared to the latest closing (December
10)
Offer subject to regulatory approvals
Preliminary timetable
ASSA ABLOY announces public offer 13 December 2010
Offer document published 1 February 2011
Acceptance period 4-25 February 2011
Payment to shareholders 7 March 2011
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Q&A