Yleiselektroniikka Oyj has signed an agreement to acquire all shares in Machinery Group

IMPORTANT INFORMATION

UNOFFICIAL TRANSLATION FROM YLEISELEKTRONIIKKA OYJ’S FINNISH LANGUAGE STOCK EXCHANGE RELEASE

IMPORTANT: You must read the following before continuing and the following applies to this document. The official stock exchange releases of Nasdaq Helsinki listed Yleiselektroniikka Oyj are given only in Finnish. This document is an unofficial translation from the Finnish original stock exchange release and is made only for convenience purposes. Therefore, it is not intended to be relied by any current or prospective investors. In the event of any discrepancies between the Finnish and English versions, the Finnish version shall prevail. Further, any information in this document should not be relied upon for accounting, legal, tax advice or investment recommendations.

Yleiselektroniikka Oyj has signed an agreement to acquire all shares in Machinery Group to create a leading Finnish technical trading group

Inside information 3 February 2020 at 7.30 pm.

• Yleiselektroniikka Oyj to acquire all shares in Machinery Group Oy for a cash consideration of EUR 18.750 million
• The acquisition is estimated to almost double the current net sales of Yleiselektroniikka Oyj
• The completion of the acquisition is conditional on a resolution of Yleiselektroniikka Oyj’s extraordinary general meeting and the closing of the acquisition is expected to occur after the extraordinary general meeting to be held on 2 March 2020
• Machinery Group Oy’s largest shareholder is Preato Capital AB which represents 77.4 per cent of the outstanding capital and votes in Yleiselektroniikka Oyj
• The independent committee of the Board of Directors has received a fairness opinion statement stating that the acquisition’s terms, including the purchase price, are fair and reasonable to all shareholders of Yleiselektroniikka Oyj

Yleiselektroniikka Oyj (“Yleiselektroniikka”) has today signed an agreement to acquire all shares in Machinery Group Oy (“Machinery”) from Yleiselektroniikka’s largest shareholder, Preato Capital AB (“Preato Capital”), and other shareholders of Machinery for a cash consideration of EUR 18.750 million. The completion of the acquisition is conditional on a resolution of Yleiselektroniikka’s extraordinary general meeting. The Board of Directors of Yleiselektroniikka will convene an extraordinary general meeting, to be held on 2 March 2020, in order to approve the acquisition and the amendment of the Articles of Association of Yleiselektroniikka.

The independent members of Yleiselektroniikka’s Board of Directors support the acquisition and recommend the shareholders to approve it. Yleiselektroniikka’s largest shareholder, Preato Capital AB, which represents 77.4 per cent of the outstanding capital and votes in Yleiselektroniikka, has in advance approved the acquisition as a selling shareholder in Machinery. In addition, Chairman of the Board Mikko Moilanen, and the CEO Janne Silvennoinen, representing together 1.8 per cent of the outstanding capital and votes in Yleiselektroniikka, have given a commitment to vote in favour of the approval in the extraordinary general meeting on 2 March 2020. Closing of the acquisition is expected to occur immediately after the extraordinary general meeting.

Background for the acquisition

The combination of Yleiselektroniikka and Machinery is an important step in creating a stronger trading group of quality industrial products, solutions and services. The combination strengthens the Group’s position especially in Finland. In addition, the company operates in Russia and the Baltic countries. The combined company has more than 300 employees in five countries.

The new Group is expected to benefit from larger size, broader offering and sharing best practices. As a result of this acquisition, the new Group is expected to have wider resources to enhance its offering and add value for its customers and principals and be better positioned to invest in future growth.

“This combination makes clear industrial sense, almost doubling the size of the company and diversifying both our geographical and industrial markets. Our aim is to create a strong, comprehensive and evolving technical trading player in our target markets”, says Mikko Moilanen, Chairman of the Board at Yleiselektroniikka.

For employees, the combination offers a wider range of growth opportunities, thus making the employer more attractive.

Financing of the acquisition

Yleiselektroniikka will finance the acquisition through a bank loan from OP Corporate Bank Plc.

Overview of Machinery Group

Machinery, founded in 1911, is a Finnish technical trading company that offers products and solutions from the leading principals in the market within industrial engines, generators, construction machines as well as tools and machines. Furthermore, Machinery offers maintenance and service of its principals’ products and installed solutions. Machinery’s central premises in Finland are located in Vantaa, Kerava and Tampere and it has ca. 90 employees.

Estimated effects on the operation of Yleiselektroniikka

Yleiselektroniikka estimates that the acquisition will almost double its net sales. As a result of the acquisition, Yleiselektroniikka will be able to offer a wider range of technical trading products to its customers, which will expand Yleiselektroniikka’s operations into new fields of business. Yleiselektroniika will also benefit from a stronger market position and a better geographical diversification.

The new Group is expected to benefit from the increasing amount of business opportunities, enhancing operational efficiency and sharing best practices.

The acquisition is not expected to cause significant one-time integration costs or investments.

Yleiselektroniikka will publish illustrative financial information for fiscal year 2019 that takes into account the acquisition when it publishes its 2019 financial statements bulletin on 14 February 2020.

Decision-making concerning a transaction with a closely related party

The current largest shareholder of Machinery is Preato Capital AB, which also holds 77.4 per cent of the outstanding capital and votes in Yleiselektroniikka. In order to evaluate the merits of the Machinery acquisition, the Board of Directors have established a committee, consisting of such Board members who are independent from Preato Capital AB. Members of the independent committee consist of Chairman of the Board Mikko Moilanen as well as the following Board members Sari Nordblad, Anssi Ruohtula and Michaela von Wendt.

Carnegie Investment Bank AB, Finnish branch has acted as Yleiselektroniikka’s financial advisor and Borenius Attorneys Ltd as its legal advisor for the acquisition. PWC has conducted a financial due diligence on Machinery for Yleiselektroniikka. Castrén & Snellman Attorneys Ltd has acted as the legal advisor to Preato Capital AB.

The Board of Directors of Yleiselektroniikka have also requested a fairness opinion statement (“Fairness Opinion”) on the acquisition from Sisu Partners Oy. The Fairness Opinion is included as an appendix to this release in its entirety. The Fairness Opinion states that it is the opinion of Sisu Partners Oy the acquisition’s terms, including the purchase price, are fair and reasonable to all shareholders of Yleiselektroniikka Oyj.

In accordance with the Finnish Companies Act provisions on transactions with closely related parties, the Board members Simon Hallqvist and Martti Yrjö-Koskinen have not and will not participate in the decision-making concerning the acquisition.

Key financials of Machinery Group

The financials presented in the table are based on unaudited (2019) and audited (2018) Machinery financials. The numbers are prepared under the Finnish Accounting Standards (FAS) and are not adjusted to the International Financial Reporting Standards (IFRS), used by Yleiselektroniikka.

*The Group’s depreciation of goodwill under FAS in 2019 were around 775,000 euros (unaudited) and in 2018 around 750,00 euros (audited).

This transaction does not have any dilutive effects on the shareholdings in Yleiselektroniikka.

Appendix: Fairness opinion statement of Sisu Partners Oy

Additional information:

Requests for additional information are asked to direct to Iida Valin who will coordinate the answers
Iida Valin
+358 40 745 2185

Yleiselektroniikka in brief

Yleiselektroniikka is a Finnish electronics company established in 1969. The Company is one of Finland’s most significant component and production equipment suppliers for demanding electronics and communications applications. Yleiselektroniikka employs over 200 people, of whom approximately 50 in Finland. In addition to Finland, the Company has operations in the Baltic countries and Russia. In 2018, the Company generated a turnover of 57.2 million euros. The Company is headquartered in Espoo, where it also has a store and a product warehouse. Yleiselektroniikka has been listed on the Helsinki Stock Exchange since 1988.