EFFECTS OF GETINGE’S ACQUISITION OF HUNTLEIGH
As announced earlier, Getinge’s intention with this press release is to further specify the financial and operational effects of the Huntleigh acquisition that was completed during January 2007.
Through the acquisition of Huntleigh, which is being integrated with Getinge’s Extended Care business area, a leading global player is being created for products and services for the care of people with reduced mobility and the medical conditions connected with this. The merged operations will have sales in excess of SEK 6 billion for the current year and will employ about 4,400 persons globally at some 60 operative units. The acquisition of Huntleigh was primarily undertaken to provide Extended Care with a new platform for long-term growth, but also as a step in strengthening efficiency and competitiveness.
SALES SYNERGIES
Huntleigh and Extended Care are two highly complementary operations in terms of customer orientation, product offering and geographic coverage. Historically, Huntleigh has its customer base in hospital care, while Extended Care’s customers are within care for the elderly. Huntleigh’s products are primarily aimed at wound care and stimulation of the body’s natural blood circulation, while Extended Care’s focus has been on the transfer and hygiene of patients. As an effect of the favourable complementary characteristics, the business area anticipates long-term sales synergies, in which Huntleigh’s product program can be marketed to Extended Care’s existing customers in elderly care and Extended Care’s products can have a more rapid impact in hospitals.
Sales synergies that are assessed as long-term are expected to have a positive impact on operations from mid-2008 and onward and will ensure growth in line with Extended Care’s ambitions for organic growth of 7% per year.
COST AND EFFICIENCY SYNERGIES
In terms of cost and efficiency synergies between Extended Care and Huntleigh, the effects are expected to become apparent already this year. Cost synergies are mainly found in three areas: the head office function, the market organisation and the supply chain area.
Head office function
Since Huntleigh is making the transition from a public company in the UK to an integrated part of the Extended Care business area, there is no longer a need for a separate head office for Huntleigh. Accordingly, closure of the head office in Luton was initiated and completed during the first quarter of the year.
Market organisation
Since 1 March this year, Huntleigh and Extended Care’s market organisations have been organised in a common, global structure. The new market organisation entails five geographic regions containing Extended Care and Huntleigh’s operations within the territory. In addition, each country, with one exception, will have a country manager, who will head Extended Care and Huntleigh’s operations in the country. During the next two years, regional and country managers will be responsible for securing synergies in sales, service and administration, and infrastructure in an optimal manner.
Supply-chain optimisation
In terms of the supply chain area, it is assessed that Huntleigh, similar to Extended Care, will be able to implement considerable efficiency enhancement of its operations by utilising the purchasing and production opportunities offered by China and the recently completed production unit in Poznan, in Poland. Extended Care and Huntleigh’s purchasing are similar in several areas. Regarding storage and logistics, there are favourable possibilities for creating a better and more efficient structure through the merger that will affect both the cost structure and tied-up capital. Since 1 March, there is a joint supply chain organisation for Extended Care.
FINANCIAL EFFECTS
Getinge announced earlier that the acquisition of Huntleigh will not change the financial objectives established for the Extended Care business area and which entail that Extended Care is expected to grow organically by about 7% on average and is expected to have an EBITA margin exceeding 19%. These financial targets are expected to be met in 2009.
The margin expansion is mainly a consequence of greater efficiency resulting from the activities mentioned above and which are expected to generate more than SEK 300 million in annual cost synergies as of 2009/2010. Cost synergies for the current year are expected to amount to between SEK 50 and 60 million, to subsequently increase to about SEK 200 million in 2008 and SEK 300 million in 2009/2010.
In the next three-year period, the restructuring costs are expected to amount to about SEK 400 million, of which as much as SEK 250 million could be charged to the current year. The remaining restructuring costs will mainly be charged to 2008. Restructuring costs amounted to SEK 50 million for the first quarter of the year.
Sales synergies are not expected to have any effect on the current year, but will first become apparent as of 2008.
A thorough analysis of the acquisition-related surplus values resulting form the acquisition of Huntleigh entail that the Group’s amortisation will increase by about SEK 120 million per year. In addition, the acquisition of Huntleigh entails that the Group’s net financial items will increase by about SEK 290 million for the current year (11 months).
EFFECTS OF EARNINGS FOR THE CURRENT YEAR
The Getinge Group anticipates that, during its first year of operation, Huntleigh will make a positive contribution to pretax earnings, excluding restructuring costs, but including amortisation of acquisition-related surplus values and financing costs. Huntleigh is consolidated within the Getinge Group as of 1 February.
REVIEW BY THE UK COMPETITION AUTHORITY
As is customary and was announced earlier, the merger of Huntleigh and Extended Care has been the subject of review by the relevant competition authorities in several countries. To date, Extended Care has received approval from all bodies outside the UK, where the review is still in progress. Any synergies described above could be affected depending on the length of time it takes to gain approval in the UK and what the final decision is by the UK competition authority.
EFFECTS OF GETINGE’S ACQUISITION OF HUNTLEIGH
As announced earlier, Getinge’s intention with this press release is to further specify the financial and operational effects of the Huntleigh acquisition that was completed during January 2007.
Through the acquisition of Huntleigh, which is being integrated with Getinge’s Extended Care business area, a leading global player is being created for products and services for the care of people with reduced mobility and the medical conditions connected with this. The merged operations will have sales in excess of SEK 6 billion for the current year and will employ about 4,400 persons globally at some 60 operative units. The acquisition of Huntleigh was primarily undertaken to provide Extended Care with a new platform for long-term growth, but also as a step in strengthening efficiency and competitiveness.
SALES SYNERGIES
Huntleigh and Extended Care are two highly complementary operations in terms of customer orientation, product offering and geographic coverage. Historically, Huntleigh has its customer base in hospital care, while Extended Care’s customers are within care for the elderly. Huntleigh’s products are primarily aimed at wound care and stimulation of the body’s natural blood circulation, while Extended Care’s focus has been on the transfer and hygiene of patients. As an effect of the favourable complementary characteristics, the business area anticipates long-term sales synergies, in which Huntleigh’s product program can be marketed to Extended Care’s existing customers in elderly care and Extended Care’s products can have a more rapid impact in hospitals.
Sales synergies that are assessed as long-term are expected to have a positive impact on operations from mid-2008 and onward and will ensure growth in line with Extended Care’s ambitions for organic growth of 7% per year.
COST AND EFFICIENCY SYNERGIES
In terms of cost and efficiency synergies between Extended Care and Huntleigh, the effects are expected to become apparent already this year. Cost synergies are mainly found in three areas: the head office function, the market organisation and the supply chain area.
Head office function
Since Huntleigh is making the transition from a public company in the UK to an integrated part of the Extended Care business area, there is no longer a need for a separate head office for Huntleigh. Accordingly, closure of the head office in Luton was initiated and completed during the first quarter of the year.
Market organisation
Since 1 March this year, Huntleigh and Extended Care’s market organisations have been organised in a common, global structure. The new market organisation entails five geographic regions containing Extended Care and Huntleigh’s operations within the territory. In addition, each country, with one exception, will have a country manager, who will head Extended Care and Huntleigh’s operations in the country. During the next two years, regional and country managers will be responsible for securing synergies in sales, service and administration, and infrastructure in an optimal manner.
Supply-chain optimisation
In terms of the supply chain area, it is assessed that Huntleigh, similar to Extended Care, will be able to implement considerable efficiency enhancement of its operations by utilising the purchasing and production opportunities offered by China and the recently completed production unit in Poznan, in Poland. Extended Care and Huntleigh’s purchasing are similar in several areas. Regarding storage and logistics, there are favourable possibilities for creating a better and more efficient structure through the merger that will affect both the cost structure and tied-up capital. Since 1 March, there is a joint supply chain organisation for Extended Care.
FINANCIAL EFFECTS
Getinge announced earlier that the acquisition of Huntleigh will not change the financial objectives established for the Extended Care business area and which entail that Extended Care is expected to grow organically by about 7% on average and is expected to have an EBITA margin exceeding 19%. These financial targets are expected to be met in 2009.
The margin expansion is mainly a consequence of greater efficiency resulting from the activities mentioned above and which are expected to generate more than SEK 300 million in annual cost synergies as of 2009/2010. Cost synergies for the current year are expected to amount to between SEK 50 and 60 million, to subsequently increase to about SEK 200 million in 2008 and SEK 300 million in 2009/2010.
In the next three-year period, the restructuring costs are expected to amount to about SEK 400 million, of which as much as SEK 250 million could be charged to the current year. The remaining restructuring costs will mainly be charged to 2008. Restructuring costs amounted to SEK 50 million for the first quarter of the year.
Sales synergies are not expected to have any effect on the current year, but will first become apparent as of 2008.
A thorough analysis of the acquisition-related surplus values resulting form the acquisition of Huntleigh entail that the Group’s amortisation will increase by about SEK 120 million per year. In addition, the acquisition of Huntleigh entails that the Group’s net financial items will increase by about SEK 290 million for the current year (11 months).
EFFECTS OF EARNINGS FOR THE CURRENT YEAR
The Getinge Group anticipates that, during its first year of operation, Huntleigh will make a positive contribution to pretax earnings, excluding restructuring costs, but including amortisation of acquisition-related surplus values and financing costs. Huntleigh is consolidated within the Getinge Group as of 1 February.
REVIEW BY THE UK COMPETITION AUTHORITY
As is customary and was announced earlier, the merger of Huntleigh and Extended Care has been the subject of review by the relevant competition authorities in several countries. To date, Extended Care has received approval from all bodies outside the UK, where the review is still in progress. Any synergies described above could be affected depending on the length of time it takes to gain approval in the UK and what the final decision is by the UK competition authority.
For further information, please contact:
Johan Malmquist, President or Ulf Grunander, CFO
Getinge 12th April 2007
Johan Malmquist
President
For further information, please contact:
Johan Malmquist, President or Ulf Grunander, CFO
Getinge 12th April 2007
Johan Malmquist
President