BWG Homes acquires Kärnhem
BWG Homes ASA has entered into an agreement to acquire Swedish house builder and project developer Kärnhem AB. BWG Homes acquires all shares in the company for SEK 60 million. An earn-out agreement has been made where the sellers will receive 50 % of the operating result before interest and taxes (EBIT) during the coming three years, starting in 2013. The share purchase agreement is conditional of the approval by the Swedish competition authorities. The transaction will be executed after such approval has been granted, however at the earliest on 2 April 2013.
Kärnhem has a number of new projects for sale in addition to many projects that will be developed during the coming years. The company will need new capital to finance the further growth. The company will receive financing through the sellers lending SEK 20 million of the compensation received to Kärnhem AB for three years, and at the same time BWG Homes will grant the company a credit facility of SEK 20 million.
The company is a specialized project development organization with a project portfolio of approx. 250 units owned by the company. In addition, the company further controls a land portfolio with capacity for approx. 1 500 units, mainly in the housing co-operative segment (BRF).
Kärnhem has made good profits for some years, but saw a decline in profits in 2011 and 2012, mainly due to the general market situation in Sweden combined with internal restructuring for optimizing the operations of the company. The Kärnhem group had a turn-over of SEK 224.3 million in 2012, and result after tax was negative at SEK 3.5 million. The book value of equity at the end of 2012 was SEK 82.6 million.
"Kärnhem is an established brand within the multi-dwellings-segment (row-houses and apartment buildings) in Sweden, with good expertise on housing co-operatives as a project model. The company, which is virtually debt-free, has been re-organized during the past few years, and is a lean organization, with its head office in Växjö. The acquisition of Kärnhem will strengthen BWG Homes’ position in Sweden and expand the product spectre in the housing market. It will immediately give us a significant position in apartment-building and housing co-operatives, which will supplement our existing production of single-family houses (Myresjöhus and SmålandsVillan) with products for multiple dwellings. We will also gain access to a large number of attractive plots in growth areas and market adapted projects that are ready for realization," says CEO Lars Nilsen, BWG Homes ASA.
"We have a great respect for the development achieved by Kärnhem's management and the other employees since its establishment in 2003. It has been important for BWG that the management and key staff stay in order to realize our joint ambitions in the Swedish market. The current principal owner Anders Öman will take a place on the board of Kärnhem AB. The company will also, going forward, be led by current CEO Johan Karlsson. Peter Carlsson, who was one of the co-founders of Kärnhem, will stay on as project director", says Lars Nilsen.
"We have been looking for a long-term owner with the financial strength to continue Kärnhem's work and realize the growth that we believe the company can achieve. BWG Homes is an attractive partner for us," says Anders Öman, current principal owner of Kärnhem.
The core activity of Kärnhem AB is development of housing projects based on its portfolio of land and the products the company has developed. The housing projects are developed with all types of houses – from detached houses to row-houses and apartment buildings. Great emphasis is put on standardization and reuse of products. The housing projects are delivered with completed outdoor areas. The portfolio of land is to a large extent based in growth areas from Stockholm and southwards. Over 70 % of the housing projects are construction of housing co-operatives. When construction begins, the land and building activity are sold to the housing co-operative.
Kärnhem has 52 employees, including its project development department and a factory which manufactures wall panels and windows. The house building is performed by external contractors who buy wall panels and windows from Kärnhem's production. For more information about Kärnhem, visit www.karnhem.se.
BWG CEO, Lars Nilsen, tel: +47 23 24 60 00
BWG CFO, Arnt Eriksen, tel: +47 23 24 60 37, +47 922 14 625.
Current principal owner of Kärnhem, Anders Öman, tel: +46 470 79 98 98
Kärnhem CEO, Johan Karlsson, tel: +46 470 79 98 73
BWG Homes develops, sells and constructs residential homes in the Nordic region. The brands owned by the Group are Block Watne and Hetlandhus in Norway, Myresjöhus and SmålandsVillan in Sweden. Ranked as a leading residential house builder in its markets, the Group annually completes approx. 2 000 new homes through own residential projects and for individual customers. BWG Homes has 1 015 employees. In 2012 the turnover was NOK 3.5 billion.