Lu-ve S.p.A. announces the signing of binding contracts for
acquisition of Spirotech heat exchangers, a leading Indian company in
heat exchanger coils.
LU-VE, whose shares were admitted to
trading on the AIM Italia market in July 2015, is the holding company of
LU-VE Group, one of the main European producers of heat exchangers and
ventilated products for the refrigeration, air conditioning and
industrial process cooling markets, with production facilities in Europe
and China.
Spirotech is an Indian company with its manufacturing
facility in Bhiwadi in Rajasthan, about 60 km south of New Delhi. It
produces technologically advanced heat exchangers coils
(copper/aluminium and aluminium/aluminium) with more than 70% of
revenues from export customers having end applications in domestic
appliances, air conditioning and refrigeration. The company was founded
in 1994 by Dr Rajeshwar Kumar Malhotra and Mr S. Srinivasan, the
Chairman and Managing Director respectively.
LU-VE group had set
up LU-VE India a few years back to undertake sales and marketing
operations in India. The acquisition of Spirotech would allow LU-VE
group to use the existing business and operations of Spirotech as a
platform to rapidly expand its business in India and nearby countries.
LU-VE group believes that there are significant synergies to be realized
by integration of its existing operations in India.
Under the
binding contracts, LU-VE agreed to acquire 95% shares of Spirotech from
existing shareholders while the remaining 5% would be held by Mr S.
Srinivasan, who would continue as the Managing Director, and who will
enter at closing an agreement granting reciprocal Call/ Put options to
buy and sell such 5% after 3 years from closing.
Dr. Malhotra
would remain engaged with Spirotech as a Consultant and provide full
support in transition as Spirotech is integrated with the LU-VE group.
He would also maintain his position as non executive Chairman of Board
of Directors of Spirotech, while 4 representatives from LU-VE group and
an independent member would join the Board.
For the financial
year ended March 2016, Spirotech clocked revenues of ~21 Million Euros,
EBITDA of ~ 4.5 Million Euros and PAT of ~2.1 Million Euros. The net
financial position as on July 31, 2016 is positive ~ 0.8 Million Euros.
At present, there are no existing commercial relationships between Spirotech and LU-VE Group.
The
transaction entails an equity value for 100% of Spirotech equal to 33.6
Million Euros. The transaction is subject to customary closing
conditions and it is expected that the closing would occur by the end of
October, 2016. The acquisition would be undertaken through its 100%
subsidiary company in India, LU-VE India Company Private Limited (“LU-VE
India”).
With the acquisition of Spirotech, LU-VE Group has
taken another important step in its strategy of internationalization
through acquisitions, which was one of the main reasons for its stock
exchange listing in 2015.Spirotech will enable LU-VE Group to
significantly strengthen its production base in the Asian countries,
where it is anticipated that there will be important developments for
the industrial and commercial refrigeration industry due to creation of a
modern cold chain to support agriculture, the food industry and
commercial distribution.
The President of LU-VE Iginio Liberali said: “We
have recognized in Spirotech a company aimed by the same passion for
innovation which is the value of LU-VE Group. Spirotech has been for
years preferred supplier of some of the most prestigious European
brands, thanks to the respect of the highest quality requirements for
products and services. In addition, it is well rooted in the local
market. This acquisition is of strategic importance for us. It allows
LU-VE Group to expand its presence in India and into the nearby
countries, to extent the range of our applications, as well as to be
closer to some of our global customers. In conclusion, as President of
LU-VE Group, I want to welcome the entire team of Spirotech”.
The Chairman of Spirotech, Dr. R.K. Malhotra, said: “The
Spirotech team is delighted to become a part of LU-VE. It will enable
us to pool our considerable expertise in innovation to develop the best
products for the benefit of customers worldwide. It will also enable us
to accelerate our growth into new markets and in manufacturing capacity
and manufacturing excellence”.
The Managing Director of Spirotech, Mr. S. Srinivasan, said: “It
is a perfect alignment whereby LU-VE can utilise Spirotech as a
manufacturing base for entering new markets in Asia and other
territories. The efficient, mass manufacturing capabilities of Spirotech
and LU-VE’s strong presence in Europe will be a great advantage to
propel growth significantly”.
A presentation of Spirotech and
of the operation will be explained by the Managing Directors of LU-VE
during the conference call on 28 September 2016 for the presentation of
the half-yearly figures.
MGPE S.r.l. and Translink Corporate
Finance, with a cross-border team composed of Translink India (BMR
Advisors) and Translink Italy, acted as financial advisors to LU-VE
while Studio Biscozzi Nobili and BMR Legal acted as the legal advisors.
SSKM & Co was the transaction advisor to the shareholders of
Spirotech and JSA was the legal advisor.