ICT Automatisering to merge with Brandfort

  • July 24, 2013
  • Hans Martens

ICT Automatisering N.V. (“ICT”) today announces that it has entered into an agreement with the shareholders of Brandfort B.V. (“Brandfort”), which, subject to certain conditions such as a mutually satisfactory outcome of due diligence and ICT shareholder support, will result in a merger of ICT with Brandfort. Brandfort is a company privately held by Jan Brand, active in the field of mechanical and software development in the Benelux. The transaction will create a software and engineering combination (the "Combination”) with an annual turnover of over EUR 100 million and over 1,000 highly educated technical staff.

Transaction highlights

  • The Combination will deliver extensive technical skills on project, consultancy and secondment basis, adding significant value for clients
  • The Combination will form a high graded organisation with mechanical, mechatronic and IT expertise to offer more complete solutions for clients, taking into account the entire product lifecycle
  • The Combination will have a strengthened position as employer of choice in a highly competitive market for technical staff
  • The transaction will create synergies and is expected to result in approximately 10% EPS accretion in 2014
  • The transaction will be structured as an exchange of shares in which ICT acquires all of the shares in Brandfort for newly issued ICT shares representing 27% of the outstanding shares post-closing; existing ICT shareholders will own 73% of the outstanding shares in the enlarged entity
  • The Combination will have a committed cornerstone shareholder in Jan Brand indirectly owning 27% of the outstanding shares, who is supportive of the strategic ambitions of the Combination and will assume an advisory role
  • Closing of the transaction is anticipated by the end of 2013

Transaction rationale

Brandfort is a medium sized engineering company with 250 employees and sales of EUR 17.4 million with a margin of 7%. Brandfort is jointly owned by Associated Management Consultants B.V. and Embrace N.V. (the “Brandfort Shareholders”). Brandfort operates three labels: ACE, BRACE and BDF and has an impressive client base, including companies such as DAF, Philips, ASML, IHC and Delphi.

The activities of the brands within Brandfort are primarily concentrated in the Netherlands, Belgium and Luxemburg. Based on current trading, Brandfort expects sales of EUR 19.8 million with a margin of approximately 9% in 2013.

The two companies have an excellent strategic fit and the Combination will form an enlarged platform to accelerate growth. The transaction will provide both ICT and Brandfort access to a significant number of new clients and an even stronger relationship with its existing clients. Through the Combination, both ICT and Brandfort will gain access to additional geographical markets, as well as strengthen their position in key markets.

Carlo D’Agnolo, CEO of ICT says: “We are excited about joining forces with Brandfort. Since we presented our strategy in 2011, we have been working hard on improving our operational performance and have diligently pursued our ambition of future growth. We have thoroughly investigated our options and recognized that a strategic partnership could expedite the realization of our goals. We are of the opinion that a combination with Brandfort will benefit not only our shareholders, but also our customers and employees. Brandfort is a reliable, supportive and financially strong partner. Combining forces will accelerate our strategy of achieving a leading position as a high value system integrator and a full service technical partner of choice.”

Hans Martens, CEO of Brandfort commented: “The combination with ICT will provide multiple synergies. Both companies have an extensive client base. There are many possibilities for both companies to intensify and broaden our services to existing customers through cross-selling. Furthermore, together we can share best practices, both in operations as well as in our back-office processes. There is a great cultural fit and our strategies are very similar. We are convinced that together we can strengthen our industry visibility, offer new high-end solutions and position ourselves as the employer of choice. We look forward to combining forces with ICT and to pursuing a successful future together.”

The Combination will create a company with over 1,000 technical and highly educated employees and more than EUR 100 million in revenues. Combining the companies will lead to sales and cost synergies. Sales synergies will be achieved by cross-selling, increased utilization and a more distinctive market position and industry visibility, while cost synergies will be realized by increasing efficiency. Approximately 10% EPS accretion is expected in 2014.

The Combination has the ambition to achieve a leading position in its market and aims to become a platform for further growth, both organically as well as through acquisitions. By offering excellent professional support the Combination can provide engineering companies a platform for their further development and pursue its strategy of becoming a full service technical partner. Through a buy-and-build strategy, the Combination will target acquisitions of multiple engineering companies with mechanical and mechatronic expertise active in niche markets. The ambition is to achieve a targeted EBIT margin of 10% in 2015 and sales of EUR 200 to 250 million in 2018.

Key transaction terms and indicative timetable

The transaction is structured as an exchange of shares, in which ICT acquires all of the shares in Brandfort against the issuance of new shares in ICT. The current ICT shareholders will own 73% of the outstanding shares post-closing. The Brandfort Shareholders will jointly own 27% of the outstanding shares in the Combination. They are fully committed to the Combination and strongly support its strategic ambitions. To this effect, the Brandfort Shareholders have agreed to a lock-up of three years, subject to limited exceptions.

ICT will form the holding company. In order to be able to expedite and fully benefit from the many opportunities offered by the Combination, the Management Board will be expanded. It is contemplated that as of closing of the transaction, Carlo D’Agnolo and Hans Martens will be members of the Management Board and an additional third member will be appointed in due course. Furthermore, the Brandfort Shareholders will nominate a Supervisory Board member to the existing Supervisory Board of ICT. The ultimate beneficial owner of the Brandfort Shareholders, Jan Brand, will be appointed as an advisor to the Combination.

Resolutions to divest or liquidate Brandfort or to issue shares resulting in the dilution of the Brandfort Shareholders under 10% of the issued share capital of ICT, will require the affirmative vote of the new Supervisory Board member.

Signing and closing of the transaction are each subject to customary conditions precedent, such as a mutually satisfactory outcome of due diligence, ICT shareholder support and the absence of a superior offer. Prior to closing of the contemplated transaction, ICT will convene an Extraordinary General Meeting of Shareholders (EGM) to discuss the proposed transaction and request approval for the resolutions giving effect to the transaction as described herein.

The works councils of ICT and Brandfort will be requested to advise on the contemplated transaction. Finalisation of the due diligence and signing of the final transaction documentation is anticipated by the end of September 2013. The EGM and the closing of the transaction are anticipated before the end of 2013.

About Brandfort

Brandfort, founded in 1977 with 6 offices through the Benelux, is a medium sized engineering company with 250 employees. Brandfort has an impressive client base, including companies such as DAF, Philips, ASML, IHC and Delphi. The company operates three labels: ACE, BRACE and BDF. ACE is a development and engineering partner in the field of product development, industrial automation, high-tech systems, construction technique and processing equipment. BRACE Automotive is specialized in mechanical design and software development of drive-trains, interior modules and generic control systems. BDF Talent is a recruitment-label, for academic and high educated technical talent, which works for both their own labels as well as clients. The activities of the brands within Brandfort are primarily concentrated in the Netherlands, Belgium and Luxemburg. For more detailed information on Brandfort, visit the websites at www.ace.eu, www.brace-automotive.com and www.bdf-talent.eu.

About ICT

ICT Automatisering’s goal is to simplify and improve our clients’ business, production and communication processes and to make them more flexible. We do this by using our high-grade technological expertise. We deploy this expertise in the form of inventive and effective product and market combinations. ICT is organised in line with the markets we serve. We have six verticals: Automotive, Industrial Automation, Logistics, Machine & Systems, Healthcare and Energy. Each vertical offers professionals with specific know-how and expertise of a market’s products and processes. For more detailed information on ICT, visit our website at www.ict.eu.