Fasadgruppen Group (FG) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Clear Line establishes a presence in the UK, expanding beyond the Nordics and entering a GBP 10.5 billion and growing facade and fire remediation sector, driven by post-Grenfell regulations.

• Clear Line specializes in complex facade renovation and fire remediation, offering full-service solutions and a skilled workforce, complementing the acquirer's portfolio.

• The acquisition aligns with the acquirer's M&A strategy, leveraging Clear Line's established customer base, recurring projects, and experienced management for stable revenue and growth.

• The fragmented UK market and regulatory changes create opportunities for scale, value creation, and future consolidation.

• Clear Line sought a larger partner to scale up project capacity and leverage joint customer offerings.

Financial terms and conditions

• Total consideration is GBP 119.9 million, comprising GBP 51.1m cash, GBP 15.3m vendor/loan notes (convertible into shares), and GBP 53.4m in preference shares linked to Clear Line's performance.

• Cash portion is financed through credit facilities from Nordea, SEB, and Svensk Exportkredit, including a GBP 2.7 million credit facility.

• Loan notes will be converted to shares at a price based on the volume-weighted average share price, with an estimated dilution of 9.3% for existing shareholders.

• Preference shares entitle sellers to dividends based on Clear Line's net profits through 2028, with options for both parties to buy/sell shares at values tied to future earnings.

• The deal values Clear Line at a 3.1x multiple of adjusted EBITDA/EBITA (LTM/R12 as of June 2024); pro forma net debt/EBITDA rises to around 3.0x, with a target to reduce below 2.5x.

Synergies and expected cost savings

• Material procurement and project management synergies are anticipated, with Clear Line's advanced IT and operational practices to be shared across the group.

• The acquirer's scale enables Clear Line to access more projects and drive operational efficiencies.

• Combined operations are expected to enhance returns through further value-adding acquisitions.