ATS to Acquire Germany's Sortimat Group For $62 Million
3/25/2010 8:50:11 AM
CAMBRIDGE, ON, March 25, 2010 /CNW/ - ATS Automation Tooling Systems Inc. today announced it has entered into a definitive agreement to acquire the Sortimat Group, a world leading manufacturer of specialized assembly systems for medical products and pharmaceutical dosing devices.
Headquartered in Germany, and established in 1959, Sortimat has significant experience in advanced system development, manufacturing, handling, and feeder technologies. Sortimat designs systems primarily for the medical products and pharmaceutical devices markets. Over its successful history, it has delivered more than 2,500 programs to global companies.
Sortimat's flagship assembly automation and handling operations are located near Stuttgart where it employs more than 70% of its 450 employees. It also has locations in Chicago and a small, 60% owned joint venture in India.
In calendar 2009, Sortimat had revenues of approximately Euro 57 million and a high single digit EBITDA margin. Healthcare accounts for approximately 75%of Sortimat's worldwide revenue with the balance derived from consumer and automotive markets. Geographically, 80% of revenues are derived from European customers.
The final purchase price is expected to be up to Euro 45 million (approximately CDN $62 million at current exchange rates). At closing, ATS will make a payment of Euro 38.4 million from existing cash balances. Future payments of up to Euro 6.6 million are payable subject to achievement of milestones related to EBIT performance and specific management services over the next 2.5 years. ATS expects to complete the acquisition in the first quarter of fiscal 2011, subject to customary closing conditions, including applicable regulatory approval. The acquisition is expected to be accretive to EBIT and cash flow.
The acquisition of Sortimat aligns with ATS's stated strategy of expanding its leading position in the global automation market and enhancing growth opportunities, particularly in strategic segments, such as healthcare. The acquisition will be funded with cash on hand, making effective use of ATS' strong cash position.
"We welcome the addition of Sortimat's highly skilled people, customers, complementary technologies, scale and presence to our world leading automation business," said Anthony Caputo, ATS Chief Executive Officer. "This acquisition gives us the critical mass to organize ATS marketing and divisions into a group focused on healthcare and we intend to grow our exposure to this attractive market by helping our customers differentiate themselves from their competitors."
ATS will target margin improvements at Sortimat through expat deployment and the application of ATS best practices in command and control, program management, performance management and approach to market.
ATS Automation Tooling Systems Inc. provides innovative, custom designed, built and installed manufacturing solutions to many of the world's most successful companies. Founded in 1978, ATS uses its industry-leading knowledge and global capabilities to serve the sophisticated automation systems' needs of multinational customers in industries such as healthcare, computer/electronics, energy, automotive and consumer products. It also leverages its many years of experience and skills to fulfill the specialized automation product manufacturing requirements of customers. Through Photowatt, ATS participates in the growing solar energy industry. ATS employs approximately 2,400 people at 13 manufacturing facilities in Canada, the United States, Europe, Southeast Asia and China. The Company's shares are traded on the Toronto Stock Exchange under the symbol ATA. On October 21, 2009, ATS and Photowatt announced plans to advance the Ontario solar market. Visit the Company's website at www.atsautomation.com.
Notes to Readers:
This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of ATS, or developments in ATS's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements include all disclosure regarding possible events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. ATS cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements relate to, among other things: expected purchase price, and structure and timing of payments; expected closing of the transaction and timing thereof; expected accretive nature of the transaction; funding of the transaction; ATS' program to target margin improvements at Sortimat; ATS' strategy of expanding its leading position in the global automation market; and ATS' intention to grow its exposure to the healthcare market. The risks and uncertainties that may affect forward-looking statements include, among others: inability to close the acquisition, or delays in closing it, resulting from failure or delays in relation to satisfying conditions of closing, including conditions requiring the obtaining of regulatory and third party approvals and consents; failure to, or delays in, effectively implementing the margin improvement program at Sortimat due to management or resource constraints or unforeseen circumstances; issues arising in relation to the integration of two separate businesses; receptivity of customers, suppliers, employees, and market to the transaction; whether or not EBIT and management service targets are met; general market performance including capital market conditions and availability and cost of credit; economic market conditions; impact of factors such as increased pricing pressure and possible margin compression; foreign currency and exchange risk; the relative strength of the Canadian dollar and the Euro; performance of the market sectors that ATS serves; that one or more customers experience bankruptcy despite focus on credit terms; that continuing consolidation and restructuring efforts take longer than expected and/or incur greater costs than expected; that continuing strategic initiatives will not have the intended impact on ASG operations; the development of superior or alternative technologies to those developed by ATS; the success of competitors with greater capital and resources in exploiting their technology; risks relating to legal proceedings to which ATS is or may becomes a party; risks associated with greater than anticipated tax liabilities or expenses; and other risks detailed from time to time in ATS's filings with Canadian provincial securities regulators. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and ATS does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.
EBIT and EBITDA
EBIT and EBITDA margin do not have any standardized meaning prescribed within Canadian generally accepted accounting principles ("GAAP"). See our most recently filed MD&A for a discussion of the non-GAAP financial measures used by the company and how they relate to certain GAAP measures.
For further information: Maria Perrella, Chief Financial Officer; Carl Galloway, Vice-President, Treasurer, (519) 653-6500