SPIE (EPA:SPIE) - SPIE signs an Agreement for the Acquisition of SAG

Transparency directive : regulatory news

23/12/2016 12:00

Press release

SPIE signs an Agreement for the Acquisition of SAG

* Acquisition of the German leader in high-growth energy infrastructure
  services

* Major step forward in SPIE's development in Germany & Central Europe

* Creation of a leading multi-technical services provider in Germany, with
  complementary capabilities and diversified client base

* Highly accretive transaction, c. 12% positive impact on adjusted EPS(1) in
  2017 and c. 15% in 2018, pre synergies

* Significant cost synergies: c. EUR20 million over 2 years

* Consideration of EUR850 million, implied multiple 8.8x 2016E EBITA post
  synergies

Cergy, December 23rd, 2016 - SPIE, the independent European leader in
electrical and mechanical engineering, HVAC services and energy and
communication systems, has signed today an agreement for the acquisition of the
SAG Group ('SAG'), from private equity firm EQT. The acquisition of the German
leader in high-growth energy infrastructure services accelerates SPIE's
development in Germany & Central Europe, and enhances the Group's position as a
major pan-European technical services provider.

Commenting on the acquisition, Gauthier Louette, SPIE Chairman and CEO,
declared: 'We heartily welcome SAG to the SPIE Group. It is a highly respected
business which, like SPIE, has a century-long focus on high quality service,
operational excellence, safety, and financial discipline. We have known SAG for
a long time: it fits our business model and is well aligned with our culture.
This acquisition is a unique opportunity to build up significantly our energy
infrastructure services capabilities and to establish a leading position in
Germany and Central Europe.'

Jürgen Vinkenflügel, SAG CEO, added: 'This is a very exciting opportunity for
SAG. SPIE has a very clear strategy in Germany and Central Europe that matches
well SAG's ambitions. We share a solid tradition of technical excellence and
the fit between the two companies is evident. Our team of passionate and
committed employees has built an outstanding track record of high-quality
service over time, and cannot wait to start the next chapter of SAG's
history.'

(1) Earnings per share adjusted for amortization of allocated goodwill and
exceptional items. Accretion calculation is based on the assumption of an
integration of SAG as of January 1st, 2017, and excludes the impact of
transaction costs.

Markus Holzke, Managing Director of SPIE GmbH, commented: 'The acquisition of
SAG opens tremendous perspectives for SPIE in Germany. With complementary
competences, a high-quality client base and a significantly densified
geographical footprint, we are taking our operational and commercial
capabilities to the next level. The combination of both businesses creates a
German leader in multi- technical services and a wider platform for further
expansion.'

SAG, the German leader in energy infrastructure services

Headquartered in Langen, Germany, SAG is a service and systems supplier for
electrical power, gas, water and telecommunications networks, primarily focused
on servicing power transmission and distribution grids. The company celebrated
its 100th anniversary this year and has played a major role in shaping the
German energy infrastructure. It is now the market leader in Germany, where it
generates close to 75% of its revenue, and has an established footprint in
Slovakia, the Czech Republic, Poland, Hungary and France. SAG employs
approximately 8,000 highly qualified people across more than 170 locations,
including 120 in Germany. It is expected to generate revenue of EUR1.3 billion
and EBITA of c. EUR77 million in 2016 (2).

SAG's technical capabilities cover the full energy infrastructure value chain,
including design, engineering and installation, and the company offers a
comprehensive range of maintenance and asset support services. SAG benefits
from established relationship with a diversified client base, and operates a
low-risk, high-visibility business model, with close to half its revenue
derived from multi-year framework contracts. Over time, SAG has built leading
positions in dynamic markets, supported by structural long-term drivers, and
has consistently achieved robust organic growth.

A major step forward in SPIE's strategic development

The combination of SPIE and SAG will create a German leader in multi-technical
services, sharing the key success factors of the SPIE model: a wide range of
complementary technical capabilities, a highly diversified client base and a
densified geographical footprint. It will also provide a gateway for further
expansion into Central Europe.

(2) Based on information provided by SAG. Revenue and EBITA presented are
restated from non-recurring items and changes in perimeter.

With strong exposure to long-term growth drivers, potential for further
targeted bolt-on acquisitions, and significant cost synergies planned, this new
platform will be well poised to deliver long-term revenue growth and margin
expansion. Well-matched, deeply ingrained corporate cultures, strong
similarities in business model, and full commitment from SAG management will
ensure a smooth integration process.

Transaction details

The transaction is valued at approximately EUR850 million, including a net cash
consideration of EUR460 million and a post-tax net pension liability of EUR390
million. It is expected to be highly accretive, with a positive impact on
adjusted EPS(3) of c. 12% in 2017 and c. 15% in 2018, before synergies.

SPIE plans on delivering pre-tax synergies of c. EUR20 million in procurement,
administrative and other operating expenses over two years.

The implied transaction multiples are 11.0x 2016E EBITA pre synergies, and 8.8x
post run-rate synergies.

The transaction will be financed by an already committed bridge loan facility.
The impact on SPIE's net financial debt will be limited to EUR460 million, with
pro forma year-end 2016E net debt/ EBITDA leverage ratio anticipated to be no
higher than 3.0x. The highly cash generative profile of both SPIE and SAG will
allow for steady deleveraging going forward, while continuing to pursue the
Group's bolt-on acquisition strategy.

SPIE expects to complete the transaction in late Q1 or early Q2 2017, subject
to antitrust approval.

Conference call for investors and analysts

SPIE will host a conference call on December 23rd, 2016 at 2.00 pm Paris time
(1.00 pm London time) to discuss the acquisition of SAG.

Speakers:

Gauthier Louette, Chairman & CEO
Denis Chêne, CFO

(3) Earnings per share adjusted for amortization of allocated goodwill and
exceptional items. Accretion calculation is based on the assumption of an
integration of SAG as of January 1st, 2017, and excludes the impact of
transaction costs.

Link to the webcast:
http://event.onlineseminarsolutions.com/r.htm?e=1339605&s=1&k=
58B01E5C338B83E82A3F812BA46B517A

Dial-in:
+33 (0)1 70 77 09 43

A slide presentation will be available on our website www.spie.com, in the
"Finance/ Press releases and publications/ Publications and presentations"
section at the beginning of the conference call.

Advisors

Corporate finance: Lazard (Bertrand Moulet, Antoine Maitrot), BNP Paribas
(Berthold Mueller)
Legal (acquisition): Cleary Gottlieb Steen & Hamilton LLP (Oliver Schroeder,
Peter Polke)
Legal (financing): White & Case LLP (Thomas Le Vert, Samir Berlat)
Finance and tax: EY (Nicolas Winkler, Cord Stuemke)
Strategy and market : L.E.K. Consulting (Karin von Kienlin, Serge Hovsepian)

About SPIE

As the independent European leader in multi-technical services in the areas of
energy and communications, SPIE supports its customers to design, build,
operate and maintain energy-efficient and environmentally-friendly facilities.
With 38,000 employees working from close to 600 sites in 38 countries, SPIE
achieved in 2015 consolidated revenues of EUR5.3 billion and consolidated EBITA
of EUR351 million.

Disclaimer

Certain information included in this press release and other statements or
materials published by SPIE are not historical facts but are forward- looking
statements. These forward-looking statements are based on current beliefs,
expectations and assumptions, including,  without limitation, assumptions
regarding present and future business strategies (including the successful
integration of SAG within the Group and potential related synergies) and the
environment in which SPIE operates. They involve known and unknown risks,
uncertainties and other factors, which may cause actual results, performance or
achievements, or industry results or other events, to be materially different
from those expressed or implied by these forward-looking statements.

Forward-looking statements speak only as of the date of this press release and,
subject to any legal requirement, SPIE expressly disclaims  any obligation or
undertaking to release any update or revisions to any forward-looking
statements included in this press release to reflect any change in expectations
or any change in events, conditions or circumstances on which these
forward-looking statements are based. Such forward looking statements are for
illustrative purposes only. Forward-looking information and statements are not
guarantees of future performances and are subject to various risks and
uncertainties, many of which are difficult to predict and generally beyond the
control of  SPIE. Actual results could differ materially from those expressed
in, or implied or projected by, forward-looking information and statements.
These risks and uncertainties include those discussed or identified under
Chapter 4 "Risk factors" in the Registration Document (Document de Référence)
of SPIE which has been registered with the French Financial Markets Authority
on April 28, 2016 under number R-16-030. These risks and uncertainties include
those discussed or identified under Chapter 4 "Risk factors" in the
Registration Document (Document de Référence) of SPIE which has been
registered with the French Financial Markets Authority (AMF) on April 28, 2016
under number R-16-030, available on the websites of the Company (www.spie.com)
and of the AMF (www.amf-france.org)

This press release includes only summary information and does not purport to be
comprehensive. No reliance should be placed on the accuracy or completeness of
the information or opinions contained in this press release.

The estimated 2016 figures related to SAG included in this presentation have
been provided to SPIE by SAG within the context of the acquisition process.
These estimated figures have not been audited or subject to a limited review by
the auditors of SPIE.

This press release does not contain or constitute an offer of securities for
sale or an invitation or inducement to invest in securities in France, the
United States or any other jurisdiction.

Press contacts

SPIE
Pascal Omnès
Group Communications Director
Tel. + 33 (0)1 34 41 81 11
pascal.omnes@spie.com

SPIE
Thomas Guillois
Investor Relations Director
Tel. + 33 (0)1 34 41 80 72
thomas.guillois@spie.com

Brunswick
Agnès Catineau
Tel. + 33 (0)1 53 96 83 84
acatineau@brunswickgroup.com

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