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Intrum, Lindorff to sell off units to push through merger
Posted on Thursday, 18 May 2017 13:06
Swedish credit management services company Intrum Justitia has earmarked businesses in five Nordic/Baltic markets for sale in order to push through one of the largest acquisitions in the region on record.
At the end of 2016 the debt collector announced the purchase of Norwegian rival Lindorff for SEK 17.90 billion (EUR 2.04 billion) and an enterprise value (EV) of SEK 40.50 billion, to create a sector leader with a presence in 23 European countries.
The deal results in Nordic Capital reinvesting to become an indirect shareholder of the enlarged entity and implies a multiple of 13.2x EV to earnings before interest, tax, depreciation and amortisation (EBITDA) for the last 12 months.
On a pro forma basis, the combined group expects revenue of SEK 12.20 billion, EBITDA of 4.90 billion and a portfolio carrying a value of SEK 18.50 billion.
As of 30th September 2016, net debt to cash EBITDA was 3.6x and should reach around 3.0x over the medium term.
However, the acquisition is subject to approval from the European Commission (EC), which was notified of the intended combination on 12th April by Nordic Capital, currently the indirect majority shareholder of Lindorff.
Based on an initial investigation, the institution has flagged debt collection and purchasing activities in five markets in the Nordic and Baltic regions for competition concerns.
The response is the divestment of Intrum’s entire business in Norway and Lindorff’s in Denmark, Estonia, Finland and Sweden, which together have about 850 employees.
These five units are estimated to account for 12.0 per cent to 13.0 per cent of the combined entity’s pro forma EBITDA for 2016.
Intrum noted they also represent about 30.0 per cent of the anticipated cost savings of SEK 800.00 million in the three to four years following completion.
A final decision from the EC is due no later than 12th June 2017 and, if rubber stamped, will lead to the 20th largest acquisition by value on record of a company based in the Nordics and Baltics.
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