Billion-euro deal: KION Group buys Dematic

The world's leading provider of intralogistics 4.0

The acquisition of Dematic will make the Kion Group a leading global provider of Intralogistics 4.0 solutions. With its sales and service centers, technologies and resources, the enlarged company will be able to seamlessly offer the full spectrum of material handling products and services to customers of all sizes in diverse industries around the globe. The offering is the most comprehensive on the market and ranges from manually operated forklift trucks to fully equipped, fully automated warehouses. The Kion Group thus strengthens its position as a one-stop provider of intelligent supply chain and automation solutions and is perfectly positioned to participate in the attractive and profitable growth driven by megatrends such as Industry 4.0, digitalization and e-commerce.

Both companies complement each other through their respective strong market positions and regional presence, which opens up further opportunities for revenue growth. Dematic will leverage the Kion Group's service network and brand reputation in key markets such as Europe, China and Brazil, while the KION Group will benefit from Dematic's strong position in the US and European automation markets. The opportunities to complement each other will also create cost synergies. The combination of the Kion Group's extensive sales and service network with Dematic's large installed base also offers potential for further revenue growth from the service business and system retrofits.

A unique provider in the industry

The Kion Group had already started to build a strong position as a provider of automated system solutions with the acquisition of Egemin Automation and Retrotech over the past twelve months in order to make further progress in this attractive and growing market. "With the acquisition of Dematic, we are significantly transforming and expanding what the Kion Group is and does - for further profitable growth in a rapidly changing industry and digitalized world," said Kion Group CEO Gordon Riske. "We are becoming a unique provider of products, solutions and services. Like no other in our industry, we can now seamlessly accompany every customer on their journey towards Industry 4.0 and Intralogistics 4.0, worldwide."

"This transaction will fundamentally change our industry. Together, Kion Group and Dematic will design and deliver solutions that better enable our customers to respond to dynamic demand," said Dematic CEO Ulf Henriksson. "With a shared vision and clear commitment to research and development, together we will focus on superior customer solutions, accompanied by significant investments in this area. Together, both companies are defining a new era in material handling solutions."

"The entire Kion Group Supervisory Board is very pleased about the combination of Kion Group and Dematic and fully supports this landmark transaction, which is another milestone in the implementation of Strategy 2020," said John Feldmann, Chairman of the Supervisory Board of Kion Group AG. "Together, Kion Group and Dematic will now be in an even better position to offer their customers around the world the most suitable products and solutions the market has to offer."

"Following the purchase of Dematic in early 2013, owners AEA Investors and Ontario Teachers' Pension Plan, supported by a new management team and board, have invested heavily in the company to capitalize on supply chain automation trends driven by cross-channel retail and e-commerce," said G. Richard Wagoner, Jr, Chairman of Dematic. "Over the next three years, Dematic has achieved impressive results: Growth in backlog, revenue and profitability, significantly improved global business processes, and a broader and more diversified global customer base. We are delighted to have found KION as a new home for the company to support Dematic's continued development for the benefit of our customers, employees and other stakeholders."

Following completion of the transaction, Dematic will be integrated into the Kion Group. The company will form a fifth operating unit, which will also include Egemin Automation and Retrotech. This future operating unit will be led by Ulf Henriksson as President.

Solid financing strategy

"Kion Group's strong cash flow and debt reduction in the years since our IPO has created the balance sheet strength for such a transformative transaction," said Kion Group CFO Thomas Toepfer. "As part of our conservative financing policy, we rely on solid financing with a prudent mix of equity and debt, which maintains our financing profile with a good cross-over credit rating."

The transaction will initially be financed by a bridge loan of EUR 3 billion, which has been firmly committed by a group of banks that have a close business relationship with the Kion Group. The acquisition will then be permanently refinanced through equity, long-term capital market debt and bank loans. The capital increase through the issuance of up to ten percent of new shares utilizes the entire currently authorized capital and is supported by Weichai Power as anchor shareholder of the KION Group. The Kion Group will continue to maintain its good cross-over credit rating, with reliable access to the debt capital market. Based on its conservative financing policy, the Kion Group is considering the full range of capital-generating instruments.

www.kiongroup.com