Industri Kapital, a leading private equity investment firm in Northern Europe, intends to make an offer to buy all the shares in the Norwegian company Kongsberg Automotive ASA at NOK 105 per share. This cash bid values shareholders' equity in the company at roughly NOK 460 million (fully diluted). It is 34 per cent above the latest sell price (NOK 78.50) quoted on the Oslo Stock Exchange on Friday 12 February, and 42 per cent above the average share price (NOK 74) over the past 60 days.
"We intend to contribute actively to the group's continued development as an internationally-leading niche supplier to the automotive industry through a long-term commitment," says deputy chief executive Kim Wahl at Industri Kapital. "For us, it will be important that Kongsberg Automotive's management and workforce regard our involvement as positive and stimulating in the future work to advance the company's position and profitability."
Industri Kapital is involved in actively developing companies and it has in excess of Euro 1 billion in funds under management.
Behind the company stand long-term Norwegian and international investors such as Orkla, Storebrand, Norske Liv, Norsk Hydro, ABB, Unibank, Merita Nordbanken, Sampo and Shell.
As a supplier to the automotive industry, Kongsberg Automotive holds a strong position for seat heating, gearshift systems, clutch actuation systems, stabilising rods and components.
Revenues for Kongsberg Automotive in 1998 came to NOK 1.2 billion. Operating profit before extraordinary items was NOK 45 million, adjusted for a compensation award of NOK 16 million. The group had 1,227 employees at 31 December 1998, principally in Norway, Sweden, the UK and the USA.
The obligation to implement the bid is subject to the certain conditions being fulfilled by 24 February 1999: The company should give its consent to a due diligence process on the part of Industri Kapital, its board of directors should avoid a principally negative statement, and the company's management should adopt a positive attitude to Industri Kapital - including a declaration that the offer is accepted for shares or share options held by senior managers.
The bid is conditional upon Industri Kapital securing more than 90 per cent of the outstanding shares on a fully diluted basis. A due diligence process will be pursued during the offer period, and it is a condition that this does not expose circumstances which might be negative for the bidder's investment or for implementation of the bid, and that no incidents occur or can be expected to occur which would have a significantly negative effect on the value of the shares in Kongsberg Automotive.
Furthermore, no dispositions must be made by the company other than those necessary for its day-to-day operations, and new shares must not be issued until the acquisition has been completed. The bid is also conditional upon the authorities giving the necessary approvals on acceptable terms, including the statutory assessment by the Ministry of Industry and Trade.
A Norwegian company owned by Industri Kapital and minority shareholders BancBoston Capital and Frode Strand Nielsen has been established to implement the bid. Mr Strand Nielsen is a former director of Kongsberg Automotive. Sundal Collier & Co and Enskilda Securities are acting as financial advisers to Industri Kapital.
"Since our foundation in 1989, we have made 28 strategic investments in companies with interesting development opportunities," says Mr Wahl. "Our aim is to improve the market positions and competitiveness of these companies, and thereby create value for the shareholders. The fundamental principles of our investment strategy are active ownership, add-on acquisitions in priority business areas and geographical expansion."