SOLVING EFESO INTL
PRESS RELEASE
Financial information
SOLVING EFESO INTERNATIONAL
Solving Efeso International acquires Empact
€5 million share capital increase
reserved for Empact shareholders at €2.60 per Solving Efeso share
Structuring acquisition: enhanced range of services and geographic expansion
Paris, 6 April 2015 - Following its communication of 23 December 2014, SolvingEfesoInternational(Alternext:ALOLV),an international consultancy firm specialised in strategy and operational excellence positioned in growing markets, announces that it has acquired Empact, a Brussels-based consultancy firm specialised in implementing progressive transformations in the service sector.
Filippo Mantegazza, Chairman of Solving Efeso International, commented, "We are delighted with this acquisition, which is the most significant M&A transaction completed by Solving Efeso International since 2007, and which follows the five successful acquisitions made in recent years. We are pleased to welcome Empact's employees who share our business model and our culture. Together we will be taking a new structuring step forward in our development to consolidate our distinctive range of services, diversify our client base and expand our geographic footprint."
Bruno Machiels, co-founder of Empact, said, "We are excited to be joining Solving Efeso International. This transaction is a tremendous opportunity for the development of Empact, a company created in 2004 by four partners and which boasts about 30 consultants, primarily serving a client base of major accounts in the service industry. Whilst Empact already enjoys an enviable position in the Belgian market, this merger opens up new growth prospects."
The transfer agreement, signed on 3 April 2015, covers the entire share capital and voting rights in Empact. This transaction is partly financed by a €5 million share capital increase in Solving Efeso International ("the Group") reserved for Empact shareholders, at €2.60 per new share.
In addition, earnouts of up to €2.5 million may be paid based on the achievement of targets measured over the financial years ending 31 December 2015 and 31 December 2016.
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The acquisition price (net of both acquired cash and earnouts) corresponds to 3.6 x average EBITDA for the
2013 and 2014 financial years. This acquisition will increase the group earnings from the 2015 financial year onwards and will allow the Group to accelerate its growth in both revenue and results.
In comparison with the 2014 consolidated results, (i) Empact's 2014 revenue (€8.2 million) represents 12% of
Solving Efeso International's 2014 consolidated revenue, and (ii) Empact's 2014 EBITDA (€2.2 million) represents
32% of Solving Efeso International's 2014 consolidated EBITDA.
The Group's net debt will not increase by more than €5 million, excluding the potential earnouts to be added to the base price, as a result of the acquisition and consolidation of Empact's balance sheet.
BENEFITS OF THE TRANSACTION
Distinctive range strengthened
With its 450 employees of 45 different nationalities established in 26 countries, Solving Efeso International serves world leaders in their sectors on a global scale. The acquisition of Empact consolidates the Group's innovative and distinctive range of services, which is meeting the growing demands of the consultancy market. Solving Efeso's and Empact's services rely similarly on strategic and operational support that is effective, rapid and relevant, as well as on both a transfer of expertise and measurable results.
Extension of geographic coverage
The acquisition of Empact provides Solving Efeso International with direct access to the Belgian market, where major international groups are located. It also offers the Group greater European coverage and, likewise, extends Empact's operational scope to international markets.
Wider range of business sectors
The transaction will expand the areas of operation in the business sectors in which each of the partners currently has a strong presence, be it industry, Solving Efeso International's core business, or services, Empact's leading sector which is enjoying strong growth1.
Ease of integration
The integration of Empact will be facilitated by a similar approach to the consultancy industry. The two organisations share similar business culture based on flexible, flat organisations with reduced cost structures. They have both adopted entrepreneurial management that is responsive to market changes. Moreover, Solving Efeso International and Empact are already working on joint projects.
SHARE CAPITAL INCREASE
€5 million of the transaction is being financed through the subscription by Empact shareholders to a Solving
Efeso International reserved share capital increase in cash for the same amount (issue premium included).
This share capital increase is being carried out with waiver of the shareholders' pre-emption right, pursuant to resolution n°10 passed at the Extraordinary General Meeting of 28 May 20142.
1 Growth in consultancy to service companies: up 8% in 2015 according to the SourceForConsulting.com study
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Within this framework, 1,923,076 new shares will be issued, namely 8.6% of additional shares in comparison with the number of shares comprising the Solving Efeso International share capital on the date of the transaction, at a price of €2.60 per share. After completion of the reserved share capital increase, Empact shareholders will hold
7.9% of Solving Efeso International shares.
Subscription to this share capital increase will be paid up through offsetting a portion of the acquisition price receivable held by each of Empact's shareholders against Solving Efeso International.
In accordance with regulations, the offer of financial securities does not require a prospectus to be submitted for
AMF approval.
REINVESTMENT BY EMPACT MANAGEMENT OF 50% OF THE TRANSFER PRICE
Empact's Management undertake to reinvest 25% of the transfer price in the Group and 25% of the transfer price in Partners in Action3("PIA").
Reinvestment in the Group
At the date on which the transfer agreement is signed, Empact's Management undertake to retain 1,081,732
Group shares issued as part of the transaction. These securities represent 25% of the transfer price and 4.5% of the share capital after the capital increase. 25% of these securities may be transferred as of 16 May 2017 and an additional 25% as of 16 May 2018. The remaining 50% may be transferred as of 1 January 2019.
Reinvestment in PIA
On the date the transaction is completed, Empact's Management will transfer to PIA 841,344 new shares in Solving Efeso International. Concurrent to this transfer, Empact's Management will subscribe to a share capital increase in PIA for an amount equivalent to 25% of the transfer price.
After the transaction is complete, 76% of the Solving Efeso International share capital will be held by PIA, as against 79% previously. Empact's Management will directly hold 4.5% of Solving Efeso International shares.
TRANSACTION SCHEDULE
The transaction will be finalised by the Solving Efeso International share capital increase set to take place approximately 30 days after the date on which the transfer agreement is signed and at the latest on 31 May 2015.
2Resolution number 10 of Solving Efeso International's Combined General Meeting of 28 May 2014: Delegation of authority granted to the Management Board to increase the share capital by a nominal amount of three million (3,000,000) euros through the issue of ordinary shares (and/or other marketable securities) giving access to the share capital, with waiver of the pre-emption right, for the benefit of categories of individuals in accordance with Article L.225-138 of the French Commercial Code, as part of merger and acquisition transactions.
362.45% held by venture capital funds (FCPR Argos Soditic V-A, FCPR Argos Soditic V-B and FCPR Argos Soditic V-C) of which Argos Soditic France is the management company, and 37.55% held by Solving Efeso International Group's senior executives and managers ("Partners").
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RISKS RELATED TO THE TRANSACTION
Empact's business is subject to the same risks as that of Solving Efeso. The transaction includes two additional risks: the risk related to the integration of Empact, which if the integration were to fail may result in a decline in sales and/or profitability, and a financial risk related to the additional net debt assumed by the Group.
Advisors involved in the transaction:
For Solving Efeso International: Clairfield International, BDO, Fuchs Cohana Reboul and Liedekerke
For Empact: Arganto and Eubelius
Solving Efeso International
Solving Efeso International is a global leader in corporate strategy and operational performance improvement consulting and is positioned as a niche specialist, capable of providing unique long-term support. Created in 2007 as a result of the merger of two leading niche corporate consultancy firms, the Solving International Group employs a workforce of more than 450 consultants and is established in 26 countries (Europe, Middle East, Asia and North and South America.).
Empact
Empact is a Brussels-based consultancy firm specialised in supporting the operational implementation of change resulting from strategic reviews. It was created in 2004 by four founding partners who built a model that responds to the changing market. The Company expanded rapidly by working with major accounts, primarily in the service industry.
Contacts:
David AUREGAN, Chief Financial Officer
Tel: (+33-1) 53 53 57 00 -info.investor-relations@solvingefeso.com
Antoinette DARPY, Press
Tel: (+33-6) 72 95 07 92 -adarpy@tobnext.com
Solving Efeso International shares trade on Alternext Paris.
Free float: 21% Date of IPO: 02/07/1998
Number of outstanding shares: 22,377,352 Code 6467
ISIN FR0004500106 Bloomberg: ALOLV:FP Ticker: ALOLV Reuters: ALOLV.PA
This document may contain forward-looking financial information (particularly with regard to targets and trends) and forward-looking statements concerning Solving Efeso's financial position and performance, its operations and its strategy.
Such disclosures and statements are based on data or assumptions that could ultimately prove inaccurate and are subject to a number of risk factors, and in particular currency fluctuations and general economic and financial conditions. Solving Efeso does not assume any duty or responsibility towards investors or towards any other party to update or revise, whether as a result of new information, future events or
otherwise, all or part of the statements, forward-looking information, trends or targets provided in this document.
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