Swiss listed construction supplier Arbonia has decided to accept the US subsidiary Midea Electronics Dutch B.V. A takeover offer for its climate division. The agreed acquisition price (enterprise value) of €760 million represents a multiple of 12 times projected EBITDA based on fiscal year 2024, which is in line with previous transactions in the industry. It should be noted that, in addition to the agreed purchase price, the real estate that the Climate Division does not need to operate is not part of the transaction and is still owned by Arbonia.

Photo credit: dpa

The Climate segment develops and produces products and systems for sustainable heating and cooling, heat storage, cold distribution, ventilation and air filtration. This segment includes the system brands Kami KERMI, PROLUX, SABIANA and VASCO as well as the key brands arbonia, Britec, Brugman, Cicsa, PZP, Solius, Superia, Tecna and Termovent. Midea plans to continue investing in the climate division’s existing production sites, employees and research and development expertise. Therefore, these brands should continue to exist and expand further in the future.

1756-DMF30 Clivet Group, also part of the Midea Group and headquartered in the Veneto region of northern Italy, is a European leader in the planning, manufacturing and distribution of air conditioning, heating and air renewal and purification systems, offering a wide range of solutions for the residential, service and industrial sectors

The merger of Clivet with Arbonia’s climate division creates the European leader in climate solutions innovation, which develops sustainable and innovative solutions for living comfort and energy efficiency, thereby driving the sustainable energy transition in the building sector. The newly formed group will benefit from a complementary product portfolio, an existing network of distributors and installers, an efficient supply chain and a strategic alliance with Midea Group.

The transaction is subject to the necessary regulatory approvals and is expected to close in the second half of 2024.

Arbonia AG’s board of directors plans to distribute a portion of the proceeds from the sale to shareholders. In addition to reducing net debt, the Board will request a distribution of approximately CHF 280 million in the form of a par repayment of CHF 4.00 per share at the extraordinary General Meeting. After repayment, the par value per share will be reduced from the previous 4.20 Swiss francs to the new 0.20 Swiss francs per share. For most Arbonia shareholders, this par value repayment is likely to be tax-free.

In addition, the Board of Directors intends to propose at the extraordinary General meeting, as previously stated, a common stock dividend of CHF 0.30 per share for the fiscal year 2023, as in previous years, half of which will come from the capital reserve and half from retained earnings.

Following the ordinary dividend and par repayment, the Board intends to initiate a share repurchase program to reduce up to 6,900,000 shares (approximately 10% of the share capital).

1756-DMF30 Following the allocation of EUR 200 million to the Door business unit for organic and acquisitive growth initiatives, the strategic flexibility and development of the Door business unit is assured thanks to a strong balance sheet, very high equity ratios and low debt.

With this transaction, Arbonia’s strategic focus has shifted to the door business. The business unit continues to focus on expanding its leading position as a supplier of wooden and glass door solutions in Central and Eastern Europe.

Based on the largely completed integrated investment plan for capacity and productivity improvement, as well as increasing market share in its domestic and adjacent target markets, the segment aims to achieve above-market growth in the future. Based on the investments made and with the help of digital solutions, the division will position itself as an innovative full range supplier and cost leader.

Going forward, Arbonia wants to continue to grow organically and make acquisitions on the other hand in order to position itself more geographically in terms of product diversity and sales channels. This has resulted in an investment case with an interim sales target of around CHF 900 million, an EBITDA margin of around 15% and high free cash flow. Further key performance indicators will be announced at the Capital Markets Day.