Panel Builder System Integrator

December 8, 2020

ATS Automation Tooling Systems Inc. recently announced its intention to acquire, by way of a voluntary public tender offer, CFT S.p.A., an established global supplier to the food and beverage equipment market. The tender offer of €4.60 per share represents a total equity value of €88 million and a total enterprise value of €166 million (~C$260 million).

“This is a highly strategic transaction that will allow us to establish a broader growth platform for ATS in the regulated food and beverage equipment market, and positions us well in attractive niches,” said Andrew Hider, CEO of ATS. “With a 75-year track record, proven technology and a dedicated workforce of 900-plus employees, CFT enables us to capture more of the value chain in a vertical we covet for its stability and growth, and complements our recent MARCO acquisition. CFT also offers significant value creation potential for ATS shareholders as we work with the CFT team to apply the ATS Business Model to achieve cost and revenue synergies.”

“As an industry leader in automation with a long track record of innovating for customers, ATS is ideally suited to take CFT to the next level in our markets,” said Roberto Catelli, Representative of the Major Shareholders of CFT. “The major shareholders are very pleased to support this transaction as it will create both opportunity and value for CFT, our customers and employees in the years ahead.”

Established in 1945 and headquartered in Parma, Italy, CFT serves a global customer base through its portfolio of market-leading brands and eight facilities in Italy, Spain, Germany and Ukraine. With 140 patents, the company is a technology leader in the attractive fresh produce sorting, processing, and packaging niches. In 2019, CFT generated revenue of €254 million and EBITDA of €17.5 million. Approximately 40% of its revenue comes from Europe, 23% from North America and the remainder from other regions. CFT derives 30% of its sales from single machines, 50% from complete systems, and 20% from aftermarket parts & services. The ordinary shares of CFT are currently listed on the AIM Italia stock exchange.

Significant Synergy Opportunity

ATS expects to achieve approximately €7 million in annual cost synergies within three years of closing, including elimination of CFT’s public company costs, supply chain savings, and cost structure optimization. ATS also expects revenue synergies to generate approximately €7 million of EBITDA within three years from joint product development, cross-selling of complementary customer solutions and aftermarket initiatives. The transaction is expected to be accretive to ATS’ earnings and cash flow per share in the first year following the acquisition. ATS is targeting a double-digit return on invested capital (ROIC) by the third year following completion of the acquisition.

Key Offer Terms and Structure

The tender offer is being launched by ATS Automation Holdings Italy S.r.l., a limited liability company indirectly and wholly controlled by ATS, to acquire 100% of CFT’s outstanding shares and voting rights. The offer price has been set at €4.60 per share in cash, representing a total enterprise value of €166 million and a premium equal to 86% over the official price of CFT’s ordinary shares as of December 4, 2020 (the trading day prior to the announcement of the offer).

The tender period under offer will commence if and when approval is obtained from the applicable Italian regulatory authority. It is expected that such approval could be granted in January 2021. Once approved, the tender period will remain open for a period of time determined in consultation with the Italian stock exchange, expected to be between 15 and 40 trading days. On this basis, it is estimated that the transaction could close in the first calendar quarter of 2021.

The voluntary tender offer is subject to various closing conditions, including that: (i) ATS be in a position to acquire at least 90% of outstanding ordinary share capital by the end of the offer period in order to effect the delisting of CFT’s ordinary shares from the AIM Italia, (ii) specified changes to the by-laws of CFT are approved by its shareholders, (iii) certain lock-up arrangements are waived, and (iv) customary regulatory approvals are received, including clearance by the German anti-trust authority and approval from the Spanish Foreign Investment Authority. In the event that less than 90% of the outstanding ordinary shares of CFT are submitted to the tender offer, ATS may elect to close on such lesser amount and pursue other methods for effecting the delisting. In addition, if less than 100% of the outstanding shares of CFT are submitted pursuant to the tender offer, ATS will retain minority shareholder interests in CFT should it proceed to complete the tender offer.

ATS will finance the tender offer through a combination of cash on hand and drawing down on its revolving credit facility.

Following completion of the tender offer, CFT will continue to operate through its established operational facilities and headquarters that ATS intends to maintain in Italy.

Tender Offer Supported by Major Shareholders

ATS has entered into an agreement with certain major shareholders of CFT, currently representing 38.5% of CFT’s outstanding ordinary share capital and 60.6% of related voting rights, wherein such shareholders have agreed to irrevocably submit their shares to the tender offer.

Advisors

UniCredit S.p.A. is acting as lead financial advisor to ATS on this transaction. TD Securities is also acting as financial advisor to ATS. Clifford Chance is acting as legal counsel to ATS.

Conference Call and Webcast

ATS hosted an analyst conference call and accompanying webcast to discuss the transaction at 8:30 a.m. Eastern on Monday December 7, 2020. A replay of the conference will be available on the ATS website. Alternatively, a telephone recording of the call will be available for one week (until midnight December 14, 2020) by dialing (416) 849-0833 and entering passcode 8485216 followed by the number sign.

Source

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