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H+H signs agreement to acquire HeidelbergCement’s German and Swiss calcium silicate unit business

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With the acquisition, H+H will increase revenue by DKK 500 million and EBITDA by DKK 100 million and become the second largest European producer of calcium silicate units (CSU), focusing on the fast-growing high-rise segment. The strategic acquisition has an excellent geographic fit with H+H’s present business and will supplement H+H’s existing product offering.

Today, H+H International A/S and its subsidiary H+H Deutschland GmbH signed an agreement with HeidelbergCement AG and two other HeidelbergCement Group companies to acquire the HeidelbergCement Group’s German and Swiss CSU business (HDKS).

Transaction overview

  • The transaction implies an enterprise value of DKK 818 million
  • The purchase price will be settled in cash at closing
  • Long-term supply agreement of sand in place
  • Danske Bank A/S has committed to finance the transaction
  • During the next 12 months, H+H will evaluate different funding sources to maintain a prudent capital structure
  • The transaction does not require antitrust approvals; minor regulatory approvals to be obtained in near future
  • Closing is expected in the first quarter of 2018

Quote:
“This is a truly transformational acquisition” says CEO Michael T Andersen. “It will strengthen our presence in Germany, expand our product offering and supplement our newly acquired calcium silicate unit business in Poland. This will also create a more balanced geographic footprint and create a platform for further market consolidation.”

Strategic rationale

Today, H+H holds a strong position within aircrete in the Northern European region, especially in the UK and Polish markets. By acquiring the Polish CSU producer Grupa Silikaty (awaiting antitrust approval), H+H took the first step towards expanding its product portfolio within the fast-growing high-rise segment.

With the acquisition of HDKS, H+H will accomplish several important strategic targets:

  • Create a more balanced geographical footprint
  • Expand its product offering, mainly within residential high-rise buildings, becoming the second largest European player within CSU
  • Create scale and critical mass in the German operations, including expansion possibilities within both aircrete and CSU operations
  • Benefit from best practice sharing with the Polish operation of Grupa Silikaty
  • Harvest synergies from the integration in Germany, estimated DKK 10 million when full integration is reached during the next three years

About HDKS

HDKS consists of the following indirect subsidiaries of the listed German company, HeidelbergCement AG: Heidelberger Kalksandstein GmbH, KS-Quadro Bausysteme GmbH and Hunziker Kalksandstein AG together with certain properties owned by subsidiaries of HeidelbergCement AG. Estimated 2017 sales is DKK 500 million with an EBITDA of DKK 100 million. The business employs approximately 200 full-time employees.

HDKS produces and sells CSU, which competes on the global masonry market against e.g. aircrete, clay bricks and light-weight concrete blocks. The business headquarter is in Southern Germany and it operates eight factories; seven in Germany (four in the South-West and three in the North-East) and one in Switzerland bordering Germany. HDKS holds a solid second place among the German CSU producers and is just above the volume size of Grupa Silikaty, H+H’s recent Polish CSU acquisition.

Outlook for 2017

H+H reiterates its outlook for 2017, as stated in company announcement No. 352 of 15 November 2017.

Transaction costs related to this transaction – including a special transfer tax on real estate – are expected to be in the region of DKK 25 million of which an estimated 30% is due in 2017 and will be treated as special items.

Conference call

In connection with this announcement, H+H will host a conference call on 15 December 2017 at 10.00 CET. Presentation material will be available at www.HplusH.com prior to the call.

CEO Michael T Andersen, CFO Ian L Perkins and Vice President for Business Development and IR Bjarne Pedersen will present the rationale, transaction details etc. of the acquisition.

Dial-in details for investors and analysts: +45 3527 0229, conference ID: 501455


Kent Arentoft                                                                            Michael T Andersen
Chairman of the Board of Directors                                           CEO



For further information please contact Michael T Andersen, CEO, or Bjarne Pedersen, Vice President, Business Development & IR, on telephone +45 35 27 02 00.

Disclaimer

This announcement contains forward-looking statements. Such statements are subject to risks and uncertainties, as various factors, many of which are beyond the control of H+H International A/S, may cause actual developments and results to differ materially from the expectations expressed in this report.

H+H’s core activity is the manufacture and sale of autoclaved aerated concrete or aircrete, with a revenue in 2016 of DKK 1.6 billion. The main product is blocks used for building new houses, mainly in the low-rise segment. H+H has 13 aircrete factories in Northern and Central Europe and Northwest Russia with a total output of more than 3 million cubic metres of aircrete a year and has a leading position in most of its markets. H+H has around 1,000 employees and is listed on Nasdaq Copenhagen.



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