Hexagon Composites — M&A Activity 2016

Oct 5, 2016

Hexagon Composites acquires xperion and strengthens its position in the composite pressure cylinder market

Hexagon Composites acquires xperion and strengthens its position in the composite pressure cylinder market

Hexagon Composites ASA (HEX.OL), a global leader in composite pressure cylinders

for gaseous alternative energy, has entered into an agreement with AVANCO GmbH

to acquire their wholly owned subsidiary, xperion Energy & Environment, a market

leader in Type 4 high pressure cylinders. The acquisition will enable Hexagon

Composites to strengthen its global market presence and further broaden its

product and technology portfolio.

Hexagon Composites operates some of the world's most advanced facilities for

designing, testing and manufacturing all-composite cylinders for gas

applications. By securing manufacturing capacity in Germany, Hexagon Composites

is expanding its position in Europe considerably. The integrated Group will now

have modern and specialized production units in Germany, USA and Norway.

"This acquisition represents another significant step in our growth strategy,"

says Jon Erik Engeset, President & CEO of Hexagon Composites. "We are impressed

with how xperion has developed a highly competent international organization. We

are confident that the acquisition will increase our competitiveness, market

penetration and shareholder value and is well-timed given the current industry

conditions."

"Hexagon Composites is one of the leading players in the composite pressure

cylinder market, and the transaction will give xperion and its employees a

strong industrial owner", comments Holger Garbrecht, CEO of AVANCO Group. "This

is a future-oriented step, and we are convinced that both organizations will

complement each other, enabling an optimal position in terms of markets and

products."

The environmental value proposition of CNG, biogas and hydrogen continues to

stimulate demand in markets world-wide. The two companies are well positioned in

the hydrogen value chain with recent orders received for car, bus and railroad

applications. With this acquisition, Hexagon Composites has further strengthened

its strong commitment to the alternative energy space.

The xperion group includes high-pressure composite cylinder operations for

light-duty vehicles, heavy-duty trucks, transit buses and gas transportation

solutions at its modern production plants in Kassel, Germany and Ohio, USA. In

2015, the group recognized net sales of EUR 39 million and EBITDA of EUR 5.2

million on an adjusted basis. The two operations have 140 employees.

The acquisition of xperion's Ohio facility is pending and subject to an option

clause allowing Hexagon Composites until the end of year to exercise.

The enterprise value of xperion is EUR 43.5 million (approx. NOK 390 million) on

a cash and debt free basis. Additionally, an earn-out payment of up to EUR 11.5

million (approx. NOK 104 million) may become payable in 2019.

The following additional information is provided in accordance with Continuing

Obligations of listed companies section 3.4.2:

1.) Transaction and parties: Hexagon Composites ASA, through a wholly owned

subsidiary Hexagon Composites Germany GmbH, has acquired 100% of the share

capital of xperion Energy & Environment GmbH and its subsidiary companies from

the selling company xperion Holding GmbH, a wholly owned subsidiary of AVANCO

GmbH. The Intellectual Property Rights enjoyed by xperion Energy & Environment

GmbH have also been acquired as a part of this transaction. The transaction is

not subject to any further material closing conditions, as closing occurred

simultaneous with signing.

2.) Consideration: The total net cash consideration for the transaction is

approximately EUR 40.0 million, of which purchased internal debt amounts to EUR

9.4 million. Hexagon Group will also subsequently assume EUR 1.6 million in

external debt. This will be financed through the Group's available financing

facilities. The current financing facility has been modified to a bilateral

facility with DNB Bank, incorporating certain beneficial changes to the facility

particularly in relation to higher leverage covenants. The modifications will

allow more flexibility for the Group overall going forward. The overall size of

the facility remains at NOK 1 billion, comprising a main revolving credit with

overdraft facility of NOK 600 million and an optional ancillary facility of NOK

400 million.

3.) Further description of the companies and transaction: xperion Energy &

Environment GmbH has activities primarily in the Mobile Pipeline, Light Duty

Vehicles and Hydrogen segments and was previously part of a private group of

companies under AVANCO GmbH. Please refer to the attachment to this notice which

gives the xperion Energy & Environment GmbH proforma audited financial

statements for the year 2015 and proforma unaudited financial statements for

year to date June 2016. The Net Assets acquired, as at end of year 2015

reference basis, is EUR -0.4 million (approx. NOK -3.6 million). Total reported

Operating Income on the full year 2015 basis is EUR 39.0 million (approx. NOK

350 million). The net profit on this reference basis is approximately EUR 0.6

million (NOK 5.4 million). The total number of employees in this business is

140. xperion Energy & Environment GmbH, consistent with German practices, does

not have a board of directors. The acquired entity is expected to be self-

financed to the extent that is possible. Off-balance sheet items are restricted

to leases of buildings and equipment, deferred tax assets and guarantees in the

ordinary course of business. Detailed information will be available from the

consolidated financial statements of the Hexagon Composites ASA Group as

compiled for 2016.

4.) Consequences of the transaction: In addition to the strengthened strategic

impacts disclosed above, the transaction will result in recognition of excess

value over book value (including Goodwill) estimated to the magnitude of NOK

285 million in the Statement of Financial Position. 100% of the acquisition

target's results will be consolidated into the financial statements of Hexagon

Composites ASA from effectively 1 October 2016.

5.) Agreements with directors or senior executives in relation to the

transaction: No such agreements have been entered into in relation to this

transaction.

SEB Corporate Finance acted as financial advisor to Hexagon Composites in

connection with the transaction referred to above. Advokatfirmaet Schjødt and

CMS acted as legal advisors to Hexagon Composites.

About Hexagon Composites

Hexagon Composites is a publicly listed company with its headquarters in

Aalesund, Norway. It operates some of the world's most advanced facilities for

designing, testing and manufacturing of all-composite cylinders for gas

applications.

About xperion

xperion Energy & Environment, headquartered in Kassel, Germany, is a leading

manufacturer of Type 4 high pressure cylinders for the automotive and gas

transportation.

For more information:

Jon Erik Engeset, CEO, Hexagon Composites ASA

Telephone: +47 916 30 550 | jon.erik.engeset@hexagon.no

Investor Relations:

David Bandele, Chief Financial Officer

Telephone: +47 920 91 483 | david.bandele@hexagon.no

Media:

Solveig D Saether, Communication Manager, Hexagon Composites ASA

Telephone: +47 906 34 977 | E-mail: solveig.saether@hexagon.no

For more information, visit the xperion website at xperion-energy.de and Hexagon

Composites website hexagon.no.

Follow us on Twitter: @HexagonASA

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.