STOCKHOLM/ZURICH (Reuters) - Switzerland’s Geberit AG GEBN.VX said on Tuesday it would buy Nordic ceramics maker Sanitec Corp SNTC.ST for 9.7 billion Swedish crowns ($1.4 billion) in an all-cash deal to expand its range of bathroom products.
The deal will allow Geberit to complement its installation, flushing and piping systems with Sanitec’s toilets, basins, bathtubs and bidets and extend its lead in revenues over European rivals such as Spain’s Roca and Germany’s Grohe.
“If this goes through as planned, we will change the playing field both in Europe and globally,” Sanitec Chief Executive Peter Nilsson told Reuters.
“We are nearly perfectly complementary. We are two market leading companies in different sectors. We will be market leading both in front of and behind the wall so to speak.”
Including debt, the bid values Sanitec at around 10 times forecast 2015 earnings before interest, tax, depreciation and amortisation (EBITDA) according to Thomson Reuters data. That is cheaper than Geberit which trades at around 15 times next year’s forecast EBITDA on an enterprise value basis.
Geberit said it would offer 97 crowns per Sanitec share, a premium of 54.6 percent to Sanitec’s closing price in Stockholm on Monday.
“We don’t believe they (Sanitec) could get to that price on their own in 12 months. In that way it’s fairly generous,” Handelsbanken Capital Markets analyst Rasmus Engberg said.
The deal, recommended by Sanitec’s board of directors, requires Geberit to acquire more than 90 percent of Sanitec’s outstanding shares.
“This transaction will make us the market leader in the broader sanitary products industry and expand the addressable market for Geberit,” Geberit CEO and Chairman Albert Baehny said in a statement.
“We need a stronger access to the end user. You need established brands,” he told a press conference, adding Geberit expected synergies of at least 45 million euros by 2018,
Sanitec was bought out from the Helsinki stock exchange in 2001 by London-based private equity firm BC Partners which sold it to Swedish peer EQT in 2005.
The firm was floated again in Stockholm in December last year in Sweden’s biggest initial public offering for seven years. The shares were offered at 61 crowns apiece and reached a high of 94.25 crowns in July.
EQT still holds a 20 percent stake in the firm and will accept the offer, as will Zeres Capital Partners with 5.5 percent of shares.
Geberit shares were up 1.2 percent at 293.2 Swiss francs by 0930 while Sanitec shares rose 51 percent to 95 crowns.
Geberit said an offer document would be made public on or about Nov. 14. The acceptance period is expected to run from Nov. 17 until Dec. 22, the company said.
J.P. Morgan is acting as financial advisor to Geberit and law firms Roschier and Gleiss Lutz are its legal advisers.
Additional reporting by Oliver Hirt, Oskar von Bahr and Johannes Hellstrom; Editing by Stephen Coates and Keith Weir