Nordic Capital to sell Handicare to Canada’s Savaria for C$521m

Laval, Quebec-based Savaria Corp has offered to acquire Sweden's Handicare Group, a provider of mobility solutions to support physically challenged or elderly people, from Nordic Capital.

Laval, Quebec-based Savaria Corp has offered to acquire Sweden’s Handicare Group, a provider of mobility solutions to support physically challenged or elderly people, from Nordic Capital. The deal has a total enterprise value about C$521 million. Savaria, a provider of accessibility solutions, is arranging financing for the deal, including a minimum C$60 million commitment from Caisse de dépôt et placement du Québec.

PRESS RELEASE

LAVAL, Québec, Jan. 27, 2021 (GLOBE NEWSWIRE) — Savaria Corporation (TSX:SIS) (“Savaria” or the “Company”), a global leader in the accessibility industry, is pleased to announce that it has made a recommended cash offer to acquire all the issued and outstanding shares of Handicare Group AB (STO:HANDI) (“Handicare”) for SEK50.00 per share (the “Offer”), representing a total consideration to Handicare shareholders of SEK2.9 billion (CAD452.3 million) and a total enterprise value (including leases) of SEK3.4 billion (CAD521.1 million). The price of the Offer is final and will not be increased. The terms and conditions of the Offer, which are directed only to shareholders in permitted jurisdictions, have been announced in a separate press release.

The board of Handicare has confirmed to Savaria that it has unanimously decided to recommend that Handicare’s shareholders accept the Offer. The recommendation is supported by an opinion from PWC Sverige according to which the Offer is fair to Handicare’s shareholders from a financial point of view. The largest shareholder of Handicare, Cidron Liberty Systems S.à r.l.(1), holding 62.9% of the shares and votes in Handicare, has informed Savaria that it supports the Offer and that it intends to accept the Offer. Nordic Capital Fund VII will enter into an undertaking to that effect once Handicare has announced its year-end report 2020 on February 4th, 2021, in light of the currently applicable restrictions under the EU Market Abuse Regulation.

Furthermore, Nordic Capital Fund VII has undertaken towards Savaria not to sell its shares in Handicare without Savaria’s prior approval. The undertaking to not sell its shares applies until May 31st, 2021 and will terminate upon the entering into of an irrevocable undertaking to accept the Offer. If successful, the Offer is expected to be completed before the end of April 2021.

Handicare provides mobility solutions to increase the independence of physically challenged or elderly people. The company manufactures and sells curved and straight stairlifts, transfer, lifting and repositioning aids, and vehicle accessibility products. Handicare is a global company with sales in approximately 40 countries and has primary manufacturing locations in the United Kingdom, the Netherlands, the United States, and China. For the fiscal year ended December 31, 2020, Handicare reported preliminary sales of EUR205 million (CAD317 million) and adjusted EBITDA(2) of EUR24 million (CAD37 million). The successful completion in 2020 of the structural cost reduction initiatives as part of Handicare’s “Lift Up” program contributed to the overall improvement in profitability.

“It has long been my vision to build a company that would serve a global market. People throughout the world are aging and in need of equipment that gives them independence and ways to stay in their homes longer. In our discussions with Handicare, it is clear we have a shared vision and mission. Their strong stairlift portfolio, sophistication of manufacturing and market reach provides an exceptional complement to our business.

(1) Cidron Liberty Systems S.à r.l. is an entity ultimately controlled by Nordic Capital VII Limited, acting in its capacity as general partner to Nordic Capital VII Alpha, L.P. and Nordic Capital VII Beta, L.P. together with associated investment vehicles (“Nordic Capital Fund VII”).
(2) Non-IFRS measures. These measures are defined in the “Non-IFRS Measures” disclaimer below.
I look forward to welcoming the employees of Handicare and their divisions which have sister segments in Savaria; patient handling and Span, Savaria/Garaventa Lift with Handicare stairlifts and our automotive group with Handicare’s adapted vehicles. We will have greater strength together and Stay at Home™ with Savaria will include Handicare products, our worldwide theme, assuming completion of the acquisition.

Together, we will be well-positioned to become a world-leading company to answer the needs of this growing market. I thank our employees for their dedication to Savaria, particularly through the challenges of COVID-19 and I also wish to thank our Board of Directors and our team of advisors. Welcome Caisse de dépôt et placement du Québec (CDPQ) as a major shareholder of Savaria – I see the potential for a long-term relationship with this flagship investor.”, commented Marcel Bourassa, President and Chief Executive Officer of Savaria.

“We are delighted to support the international expansion strategy of Savaria, a Québec manufacturer that has recorded significant growth over the years. With the acquisition announced today, the company will join the ranks of global leaders in its industry, with significant market share in North America and Europe and a wide range of products,” said Kim Thomassin, Executive Vice-President and Head of Investments in Québec and Stewardship Investing at CDPQ.

STRATEGIC RATIONALE
Enables Savaria to become a global leader in the accessibility industry, with approximately 2,300 employees across the world, and proforma combined preliminary reported revenues of over CAD671(1) million and adjusted EBITDA of CAD96 (1,2) million.
Represents a unique opportunity for Savaria to acquire a top stairlift manufacturer, producing over 45,000 stairlifts annually, bringing an innovative new product line to complement its elevator and wheelchair platform lift portfolio.

Highly complementary product offering provides for significant cross-selling opportunities for both the Accessibility and Patient Handling segments across a combined network of over 1,000 dealers and 30 direct sales offices worldwide.

Along with its extensive dealer network, the proposed acquisition adds commercial operations in the UK and Netherlands to complement Garaventa Lift’s direct sales footprint in Switzerland, Italy, Germany, Poland, and the Czech Republic, providing a tremendous platform for promoting the Vuelift in Europe.

Savaria’s Patient Handling business can leverage Handicare’s extensive North American sales and installation network, especially in the acute care setting, which is highly complementary to Span-America’s long-term care focus. This segment would have a proforma combined preliminary revenue base of over CAD140(1,3) million and a full portfolio of safe patient handling solutions comprising lifts, slings, bed frames and pressure treatment surfaces.

Enhances Savaria’s footprint by 300,000 sq. ft. through the addition of facilities in the U.S., Canada, the U.K., the Netherlands, and China, representing total square footage of approximately 950,000 sq. ft. of production related capacity.
Gain efficiencies by leveraging best practices in technology and factory automation through shared resources and joint R&D initiatives, bolstered by a combined R&D staff of over 50 persons.

Annual savings from the full contribution of Handicare’s “Lift Up” program and the expected synergies from the acquisition are estimated at CAD18(4) million and expected to be achieved within 24 months of transaction close, with the full impact of the “Lift Up” program to be realized in 2021 and 50% of the synergies to be realized over the first twelve months.

(1) Preliminary figures reported today for the financial year ended December 31, 2020.
(2) Non-IFRS measures. These measures are defined in the “Non-IFRS Measures” disclaimer below.
(3) Percentages based on YTD audited financials as at 30-Sept-2020.
(4) Forward looking statements. Please refer to the “Forward-Looking Statements” disclaimer below.

FINANCIAL HIGHLIGHTS
Proposed acquisition of Handicare for an enterprise value (including leases) of SEK3.4 billion (CAD521.1 million) represents a 12.1x multiple of Handicare’s preliminary 2020 adjusted EBITDA(1,2), including the full anticipated impact of Handicare’s “Lift Up” program(3), and 9.6x including the additional benefits of expected transaction’s run-rate synergies.(3)

Provided that the Offer is successful, the acquisition will be immediately accretive to Savaria’s pro forma combined 2020 free cash flow per share(2) (including the full anticipated impact of Handicare’s “Lift Up” program(3)), with accretion increasing to over 20% when including the expected transaction run-rate synergies.(3)

Transaction is intended to be funded through a combination of Savaria’s new credit facilities of CAD600 million, including an equity bridge of CAD200 million, and CAD160 million private placements of subscription receipts (at a price of CAD15.00 per subscription receipt).

Net debt (including leases) to pro forma adjusted EBITDA ratio at closing expected to be at 3.6x(2,3) (including the full anticipated impact of Handicare’s “Lift Up” program but excluding expected transaction synergies) with the combined company being in a position to generate attractive cash flows while providing liquidity to support operations, and allowing for timely deleveraging.

(1) Preliminary figures reported today for the financial year ended December 31, 2020.
(2) Non-IFRS measures. These measures are defined in the “Non-IFRS Measures” disclaimer below.
(3) Forward looking statements. Please refer to the “Forward-Looking Statements” disclaimer below.

ACQUISITION FINANCING
The acquisition and other related transaction costs are to be funded through a combination of new credit facilities and equity private placements of subscription receipts (together the “Equity Private Placements”) with details as follows:

New Credit Facilities: Savaria has secured CAD600 million in new committed credit facilities (including an equity bridge, of CAD200 million, which is planned to be replaced by the proceeds from the Equity Private Placements). National Bank of Canada has committed to underwrite 100% of the new credit facilities.

Bought Deal Private Placement of Subscription Receipts: Savaria has entered into an agreement with a syndicate of underwriters (the “Underwriters”), with National Bank Financial Inc., Desjardins Capital Markets, Scotiabank, and TD Securities Inc. acting as Co-Bookrunners on behalf of the syndicate. As per the agreement, the Underwriters have undertaken to purchase 6,667,000 subscription receipts (the “Subscription Receipts”) of the Company on a bought deal basis at a price of CAD15.00 per Subscription Receipt (the “Issue Price”) for gross proceeds to Savaria of approximately CAD100 million (the “Equity Issuance”). The Subscription Receipts will be offered by way of private placement to accredited investors and other exempt purchasers in all provinces of Canada.

Concurrent Private Placement of Subscription Receipts to CDPQ: Concurrently with the Equity Issuance of Subscription Receipts, the Caisse de dépôt et placement du Québec (“CDPQ”) has agreed to purchase 4,000,000 Subscription Receipts, at the same Issue Price and terms as the Equity Issuance, for gross proceeds to Savaria of CAD60 million.
Savaria has agreed to grant the Underwriters and CDPQ over-allotment options to purchase, in total, up to an additional 1,600,050 Subscription Receipts at the Issue Price, exercisable in whole or in part, at any time and from time to time on or prior to the date of the closing of the Equity Private Placements. If the over-allotment options are exercised in full, an additional CAD24 million in gross proceeds will be raised pursuant to the Equity Private Placements and the aggregate gross proceeds of the Equity Private Placements will be CAD184 million.

All Subscription Receipts issued will be subject to a four month hold period under applicable securities laws in Canada. The completion of each of the Equity Private Placements is contingent upon the concurrent completion of the other. The completion of the Equity Private Placements is also subject to the approval of the Toronto Stock Exchange and other customary closing conditions and is expected to close on February 19, 2021.

The Subscription Receipts will entitle the holder to receive one common share of Savaria (each a “Common Share”) for no additional consideration and without any further action upon the successful completion of the acquisition of Handicare. The gross proceeds of the Equity Private Placements (less 50% of the underwriting fee and expenses of the Equity Issuance) will be deposited in separate escrows with Computershare Trust Company of Canada to be released to Savaria once the conditions to the Offer have been satisfied. The holders of Subscription Receipts will also receive upon conversion of the Subscription Receipts for Common Shares, in the form of a special interest payment, an amount equal to any dividends declared by Savaria and payable to holders of Common Shares of record as of dates from and including the closing date of the Equity Private Placements to but excluding the date of the conversion of Subscription Receipts into Common Shares. Should the conditions to the Offer not have been satisfied by September 30th, 2021 or the Offer lapse, terminate or be revoked or withdrawn in accordance with its terms prior to September 30th, 2021, the gross proceeds of the Equity Private Placements will be returned to holders of Subscription Receipts with interest.

The Subscription Receipts and the common shares of Savaria have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state of the United States, and may not be offered, sold or delivered, directly or indirectly, within the United States, except in certain transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States.

CONDITIONS TO THE ACQUISITION
Completion of the acquisition of Handicare is conditional upon the Offer being accepted to such extent that Savaria becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares in Handicare and other regulatory and customary conditions. The Offer will not be completed at a lower level of acceptance.