Kitron — M&A Activity 2021

Dec 20, 2021

Kitron acquires Danish EMS provider, expands geographic footprint

Kitron acquires Danish EMS provider, expands geographic footprint

(2021-12-20) Kitron has entered into an agreement to acquire Danish EMS company

BB Electronics A/S, which has production facilities in Denmark, China and the

Czech Republic. The deal is clearly earnings accretive and adds significant

shareholder value.

"BB Electronics gives us a solid position in one more Nordic country and extends

Kitron's footprint in CEE and China. The acquisition also provides a pathway to

establishment in India. BB Electronics has well-run and highly automated

manufacturing operations serving a loyal long-term customer base. Its position

within higher-complexity segments fits perfectly with Kitron's strategy," said

Peter Nilsson, President and CEO of Kitron.

"We're impressed with the track record of the BB team and look forward to

working together.

We expect BB Electronics to continue with very little change. BB CEO Carsten

Christensen will join the Kitron Group management, maintaining current

responsibilities. We expect the transaction to be immediately earnings accretive

for Kitron, while also supporting our growth strategy," said Mr. Nilsson.

Founded in 1975, BB Electronics is a full-service EMS (Electronics Manufacturing

Services) provider based in Horsens, Denmark. The group has revenues of about

DKK 1,000 million in 2021 and about 750 employees and has over the past years

grown significantly, both organically and through M&A. The customer base is

concentrated within industry, telecom and medical.

"We believe the match with Kitron is excellent and provides an even stronger

platform for BB Electronics, including a North American manufacturing presence,

which is in strong demand from our existing customer base. We look forward to

executing on our growth strategy under the Kitron umbrella," said Carsten

Christensen, CEO of BB Electronics.

"The European EMS industry is highly fragmented, and we're convinced that we

will be even stronger together as we leverage our individual strengths to

continue both companies' track records of profitable growth," added Mr. Nilsson.

Transaction details

* Kitron will acquire 100 percent of the shares of BB Electronics A/S from BB

Electronics Holding ApS, which is owned by external investors as well as BB

Electronics management for a total of DKK 600 million (approximately NOK

822 million), on a debt- and cash-free (Enterprise Value) basis.

* The acquisition includes all operations and assets of BB Electronics, inter

alia in Denmark, the Czech Republic and China.

* BB Electronics is highly complementary to Kitron, adding operations in

jurisdictions where Kitron currently has a limited presence.

Key strategic benefits

* The acquisition will provide Kitron with a strategic geographical expansion,

establishing a presence and gateway in Denmark, an additional Nordic

country. Further, Kitron will have a strengthened presence in CEE with a

site in the Czech Republic, a pathway to establishment in India and

increased footprint and added capacity and capabilities in China.

* The acquisition provides opportunities for synergies. Following completion,

Kitron expects to increase its competence and offering within production

automation and sees new opportunities for efficiency improvements.

* Existing BB Electronics customers may benefit from Kitron's US operations,

providing a broader customer base for the combined group.

* Valuable management resources will add to Kitron and profitable contribution

to Kitron is expected from day 1 following completion.

* In summary, the acquisition is anticipated to be clearly accretive to

Kitron.

Financial details

* BB Electronics has estimated revenues of approximately DKK 1,000 million

(approximately NOK 1,370 million) in 2021. Over the same period, the company

has an estimated operating profit (EBIT) of approximately DKK 66 million

(approximately NOK 90 million).

* Kitron has established a term loan facility with DNB Bank ASA, has available

revolving credit facilities and received binding offers for debt financing

of the acquisition. Kitron expects to enter into agreements for relevant

debt financing of the acquisition in due course prior to closing and may

also consider equity financing in relation to funding of the acquisition.

There are no financing conditions for the acquisition.

* BB Electronics had net debt of DKK 54.2 million as of 30 September 2021, and

as of the same period Kitron had net debt of NOK 791 million.

* The acquisition offers an attractive opportunity to create significant value

for Kitron's shareholders and is expected to deliver returns well above

Kitron's cost of equity and be clearly accretive to underlying earnings.

* Through the addition of high quality, long-term earnings, the transaction

further diversifies Kitron's cash flows and strengthens Kitron's ability to

accelerate further growth.

The transaction is conditional upon customary closing conditions and is expected

to be completed January 2022. Until then, the two companies will continue to

operate as separate entities. Integration preparations will start immediately

upon closing.

Advisors

Sparebank 1 Markets AS is acting as financial advisor and Advokatfirmaet Selmer

AS as legal advisor to Kitron. In addition, Ernst&Young has been engaged to

carry out financial due diligence, and Bird&Bird has carried out legal due

diligence in Denmark, the Czech Republic and China.

Invitation to webcast

Kitron will host an online presentation of the transaction at 10:00 CET

tomorrow, 21 December. The presentation can be accessed here:

https://channel.royalcast.com/landingpage/hegnarmedia/20211221_1/

A presentation is attached with this announcement.

For further information, please contact:

Peter Nilsson, President and CEO, tel. +47 94 84 08 50

Cathrin Nylander, CFO, tel: +47 900 43 284

E-mail: investorrelations@kitron.com

Kitron is a leading Scandinavian electronics manufacturing services company for

the Connectivity, Electrification, Industry, Medical devices and

Defence/Aerospace sectors. The company is located in Norway, Sweden, Lithuania,

Germany, Poland, China and the United States. Kitron had revenues of about NOK

4.0 billion in 2020 and has about 1 800 employees. www.kitron.com

IMPORTANT NOTICE

This information is considered to be inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to Section 5-12 the Norwegian Securities Trading Act. This stock exchange

announcement was published by Cathrin Nylander, Chief Financial Officer of

Kitron ASA on 20 December 2021 at 21:50 CET.

This announcement is not and does not form a part of any offer to sell, or a

solicitation of an offer to purchase, any securities. The distribution of this

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Matters discussed in this announcement may constitute forward-looking

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similar expressions. The forward-looking statements in this release are based

upon various assumptions, many of which are based, in turn, upon further

assumptions. Although Kitron believes that these assumptions were reasonable

when made, these assumptions are inherently subject to significant known and

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The information, opinions and forward-looking statements contained in this

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