Samas NV (Samas) has reached agreement with local management on a management buy out (MBO) of its French operations. The transaction will considerably improve Samas’ financial position. Furthermore, the transaction is in line with Samas’ objective to simplify its business model and focus on those regions in Europe which offer Samas the best earnings recovery potential.
The French operations represent approximately a quarter of group sales and include the brands Roneo and Sansen. The transaction relates to 90% of the shares and involves the transfer of all assets, external debt and other liabilities of the French business. As a consequence Samas’ debt will decrease and the solvency ratio will rise above 35%.
Coen van der Bijl, chairman of the Executive Board and CEO of Samas:
“The divestment of our French operations is an important step in creating a new compact Samas which is required for a better future. It will also considerably improve our debt position and will bring our solvency to a level of more than 35%. This spin-off is consistent with our strategy aimed at reducing complexities and simplifying the business model. Management attention can now be focused on those regions in Europe which offer Samas the best potential for improvements. In the Benelux and Germany we already have leading market positions and the right scale to benefit from new opportunities. In Central and Eastern Europe we see considerable growth potential. We can now allocate free cash flow and management attention more effectively across these key
regions.”
Vincent Gruau, Managing Director of Samas France, leading the MBO team:
“This is a great opportunity for the management team to acquire Samas France and to build a new future for the company and its employees. In the past couple of years we have drastically restructured the French organisation and booked tremendous progress with integrating the separate businesses from Roneo and Sansen. We will continue along the same strategic path, with existing co-operations with Samas (which will retain 10% of the shares) in areas such as international accounts, procurement and chair assembly. We are confident that we can take this company to the next level on a standalone basis.”
Background and consideration
The French office furniture market is very much a regionally and nationally oriented market with diverging characteristics, setting it apart from the other regions in which Samas is active. As a consequence, the operational interaction with the rest of Samas’ European business and the added value to Samas’ group activities is limited. In 2004 and 2005, the French business went through a severe restructuring process including a legal filing for that purpose, called a ‘redressement judiciaire’. The ‘plan de continuation’, supervised by a French court, made for the subsequent years, is strictly followed and still effective to date. Over the past years following the restructuring, the French operations saw a gradual improvement of performance. Nevertheless, additional steps forward are required to reach a sound and sustainable level of profitability.
Taking into account these factors, Samas reached agreement on an MBO of the French operations. The transaction includes the transfer of all assets, external debt and other liabilities of the French business. As a result of this transaction group interest bearing debt will decrease by approximately EUR 18 million and non-current liabilities (arising from the redressement judiciaire in 2005) by approximately EUR 7 million. The French business will be sold to the French management at no consideration to be received or paid. This will result in a one-off book loss of approximately EUR 6 million, while Samas’ solvency ratio will rise above 35%.
Linked to the MBO, French management has managed to attract additional local financing for investments in the Noyon production facility and the anticipated growth strategy for the new standalone company.
In the financial year 2007/2008, sales of the French business amounted to EUR 99.6 million, representing 26% of total group sales. EBIT came in at EUR 3.1 million negative. The divestment involves a transfer of approximately 700 FTE.
Update on potential divestment of Swiss business
As announced earlier this year, Samas is looking into possibilities to spin-off its Swiss operations (SITAG) under the right financial and operational conditions. Good progress has been made in this respect, although there is no certainty as to whether an acceptable deal can or will be reached in the coming months. Therefore, Samas continues to manage Sitag as a group company, however, anticipating a possible divestment, on a more standalone basis.
Outlook and guidance
Samas’ strategy is aimed at further building and growing its business in its key regions, the Benelux, Germany and Central & Eastern Europe, in order to establish the required return to sustainable profitability. As a result of the divestment of the French business, Samas will have a slimmed down, more sound and focused organization. The disposal of the French operations allows for a faster return to profitability, as management attention and free cash flow can be more clearly directed to a smaller number of regions, with each a higher potential of improvement.
Recognizing the risks related to the current economic environment and given the cyclic nature of the office furniture business, of which some signs of adversely affecting our business can be seen, (mainly in the large project segments, where investment decisions tend to take longer) management continues to be cautious and alert. In this respect it should be noted that the financial household remains tight, which emphasizes the need of a simpler, smaller and more focused Samas. Company funding continues to be clearly a focal point of management.
Samas will publish its 2008/2009 half-year results on 5 November 2008. Samas France will be accounted for as ‘discontinued operations’ up to September 30th inclusive.
