Fibre infrastructure company Hexatronic Group has agreed to buy South Korea-based microduct manufacturer KNET for an expected enterprise value of US$63 million. The purchase price for KNET is a fixed enterprise value of US$48 million, plus a potential earn-out based on the accumulated EBITDA for the 36-month period post-closing, estimated at US$15 million. The acquisition is expected to close December 1st, 2022.
For the current year, ending December 31st, KNET is expected to generate an EBITDA of more than US$10 million. This represents a fixed transaction multiple of approximately 4.6x and an expected transaction multiple, including earn-out, of approximately 6.1x. The maximum earn-out amounts to US$36 million and is achieved if KNET performs an accumulated EBITDA for the 36-month period of more than US$63 million. If the accumulated EBITDA for the same period is less than US$27 million no earn-out will be paid out. The fixed purchase price of US$48 million is to be paid in cash at closing, fully financed with senior debt. The third quarter pro forma Net Debt-to-EBITDA ratio for the Hexatronic Group, following the transaction, including previously announced transactions, is expected to be about 1:8. The acquisition is immediately accretive to earnings and is expected to add 0.28 SEK per Hexatronic share on an annual basis.
Founded in 2002, KNET has delivered to more than 70 countries on five continents. KNET will post-closing operate as an independent company with the existing management team and will continue to serve all existing customers under the KNET brand. Headquartered in Seoul, KNET’s main markets are North America followed by Europe and Asia. The company has a manufacturing plant in Jeongeup-si in the Southern part of South Korea, with offices in the US and Indonesia, all of which are included in the deal.
“We are very pleased to have reached an agreement to acquire KNET,” commented Henrik Larsson Lyon, CEO of Hexatronic. “We have been working with the highly skilled team of KNET for more than 10 years and are impressed with the product quality and innovation capabilities. Throughout the years KNET has been an important partner to Hexatronic. Both as a volume supplier managing peaks in demand, but also for products with high technical requirements. The strong support of KNET has been crucial for our strong growth and recent success in North America. Hexatronic is today the largest customer of KNET.”
For more information, visit www.hexatronic.com