The combination of both companies represents a strong strategic fit. The intended acquisition of BuS Group will significantly strengthen its overall EMS market position and in particular its exposure to the important German market with hardly any overlap with Neways’ existing activities in Neunkirchen (Germany) and its current German clients serviced across the group. BuS Group’s customer portfolio is well balanced in both customer size and market sectors. It is based on long-term relationships, and is highly complementary to Neways customer base, which opens many cross sell opportunities.
BuS Group adds new technological capabilities and expertise as well as the potential to share best practices across the combined group in areas such as component and system development, process innovation, production and supply chain management. In addition, the combination is expected to increase purchasing power and will offer the potential of procurement synergies. The combination can also leverage on Neways’ presence and existing (low-cost) production capacity in Asia offering BuS Group clients even more competitive and tailored solutions.
Neways intends to finance the acquisition with a combination of debt and equity. The company intends to finance a large part of the acquisition with existing credit facilities and cash on its balance sheet. They may potentially draw upon additional new acquisition debt financing resources if required. In addition, Neways anticipates to draw upon the option granted by the annual shareholders’ meeting to issue new ordinary shares up to a maximum of 20% of the ordinary outstanding share capital. Acquisition financing details will be worked out over the coming months. The acquisition financing structure should provide for financial strength and flexibility of the combined group after the transaction. BuS Group is profitable and financially robust and Neways believes that as a result of the strong strategic fit and highly complementary businesses, substantial profit gains are achievable. In addition, Neways holds substantial tax loss carry forward positions in Germany, which potentially could be faster effectuated as a result of the acquisition of BuS Group. Share dilution of current Neways’ shareholders as a result of the issuance of new shares is expected to be offset by the immediate positive contribution to earnings per share of the acquisition as of deal closure. Commencement of the transaction is subject to due diligence outcomes, financing and competition clearance. The transaction is anticipated to be completed in next few months. Until completion of the transaction, both companies will continue to operate independently. The works councils of both companies will be consulted about the intended acquisition and an Extraordinary General Meeting of Shareholders will be convened in due course.
