Kendrion N.V. has announced that it has reached agreement with the owners of Linnig Antriebstechnik GmbH in Germany on the takeover of the shares in this business.
The Linnig Antriebstechnik Group is a worldwide supplier of electromagnetic clutches for engine cooling and air conditioning in buses, especially in the luxury segment, but also for specialised vehicles. The company has a leading position in this market, with an outstanding reputation and a name for innovation. The market in which Linnig Antriebstechnik operates is a growth market that still offers considerable opportunities worldwide.

The company has a turnover of around EUR 40 million, and a total of 200 employees. Its head office is in Markdorf, Germany. In addition, it has smaller branches in Mexico (51%), the United States, Brazil and China.

The Linnig Antriebstechnik Group is highly profitable. The acquisition of Linnig Antriebstechnik will therefore make an immediate and positive contribution to the net profit of Kendrion N.V. In consultation with the buyers, no further announcement has been made regarding the purchase price.

The activities of the Linnig Antriebstechnik Group form an excellent match with those of Kendrion’s Electromagnetic division (EUR 134 million turnover in 2006), which Linnig Antriebstechnik is to join. This division is developing as a niche market player, and Linnig’s activities are in keeping with this in technological terms. It is expected that Linnig can achieve its potential for growth more effectively as a part of Kendrion. Kendrion Electromagnetic will also gain the opportunity to supply products for the local markets in countries such as Mexico and the United States. Kendrion already has a production facility in China. The required expansion in scale at the various locations can be achieved more quickly because of Linnig Antriebstechnik’s activities.

The definitive purchase of the shares in Linnig Antriebstechnik only depends on the approval of the German Federal Cartel Office. This approval is expected within a few weeks.

With the purchase of Linnig Antriebstechnik, Kendrion’s deferred tax assets, and as a result its net profit, will be raised by EUR 2 to 3 million as a consequence of immediate access to Linnig’s future fiscal profits as compensation for fiscal losses in Germany that are not yet capitalised.

The takeover will be paid for in cash. Partly in consideration of this acquisition, Kendrion has amended its existing credit facilities with its banks. The new credit facility has been raised to EUR 140 million, and has a duration of three years. In addition, a junior debt facility of EUR 20 million has been agreed, with a duration of two years. More room for manoeuvre has also been acquired in the covenants. The junior debt will have to be paid back early in the event of the issue of more than 10% of the currently issued shares. Kendrion is free to distribute 30% of the net profit in dividends, as long as it fulfils its covenants.