ITAB Shop Concept: ITAB agrees to acquire HMY, aiming to significantly accelerate ITAB's expansion into key markets and complement its offering

Summary of the intended acquisition

• ITAB has granted a binding put option to the shareholders of HMY by which ITAB agrees to acquire 100 per cent of the shares in HMY for a cash consideration of EUR 320 million (approximately SEK 3,613 million[1]) on a cash and debt free basis at the option of the shareholders of HMY. The purchase price represents a multiple of 6.4x HMY's adjusted EBITDA for the financial year 2023[2], [3], and 4.0x after accounting for anticipated pre-tax synergies of EUR 30 million, had such synergies been realized during the financial year 2023[4]. HMY is owned by funds affiliated with LBO France and certain employees of HMY.
• HMY is a leading European supplier of shop fittings, checkouts and store design to the retail industry in mainly Europe, South America and the Middle East. The intended acquisition will provide significant increase in scale and relevance to ITAB's customer base, strengthen ITAB's footprint in the Western and Southern European retail markets as well as provide geographically complementary advantages given HMY's presence in especially Spain, France, Turkey and Central and South America.
• The transaction is strategically and financially compelling, and ITAB expects it to be highly accretive to ITAB's earnings per share (EPS) from completion, with an illustrative 64 per cent[5] earnings accretion for the financial year 2023 assuming a 100 per cent cash consideration (excluding any non-cash amortisation impacts). Additionally, the transaction is expected to be accretive to ITAB's sales growth and EBITDA margin.
• For the financial year 2023, HMY had sales of approximately EUR 541.2 million (SEK 6,110 million[6]) and an adjusted EBITDA margin of approximately 9.3 per cent[7].[8] The combined company would have had aggregated annual sales amounting to approximately EUR 1.1 billion (SEK 12.5 billion) including estimated run-rate synergies, with an adjusted EBITDA margin of approximately 11.6 per cent, during the financial year 2023 (on a full year combined basis).[9]
• The transaction is intended to be financed through a combination of new debt and equity, consisting of a new EUR 255 million long term credit facility provided by Danske Bank A/S, Danmark, Sverige filial ("Danske Bank"), Nordea Bank Abp, filial i Sverige ("Nordea") and Swedbank AB (publ) ("Swedbank"), and a directed new share issue of approximately SEK 850 million through an accelerated bookbuilding procedure (the "Directed Share Issue"). For further information on the Directed Share Issue, please see ITAB's separate press release, announced by ITAB today.
• The transaction is conditional upon signing of a final and definitive share purchase agreement between ITAB and the shareholders of HMY, following an information and consultation procedure with the employee representative body of HMY, necessary regulatory approvals as well as other customary closing conditions. Closing is expected to occur during the end of the fourth quarter 2024 or beginning of the first quarter 2025.

HMY, founded in 1960[10] and headquartered in Monéteau, France, is a leading European player in retail solutions and services, providing the physical infrastructure inside a store including equipment and furniture, shelving and storage, checkout solutions, ceiling / wall coverings, lighting and visual communication. HMY serves a broad range of local and global customers in more than 160 countries, across Food, DIY and Brands & Retail. Having a significant presence in Spain and France, with South Europe and West Europe accounting for 75 per cent of revenue for the financial year 2023; HMY also displays strong growth prospects in geographies such as the Middle East and South America. HMY has built a well-integrated and efficient industrial model that supports its clients both locally and globally.

HMY has 8 production facilities, the largest of which is located in Zaragoza (Spain) with additional facilities in France, Turkey and Brazil. HMY has 50 sales offices, approximately 3,400 customers (of which the top 15 customers accounted for approximately 41 per cent of the revenue for the financial year 2023) and employs approximately 3,000 people.

"We are thrilled to announce this opportunity of two equals joining forces to the benefit of our customers and employees. We see this as a strategic and cultural fit paired with clear synergies and value we can release to our customers and shareholders the next few years.",says Andréas Elgaard, President & CEO of ITAB Group.

"We are delighted about the opportunity to integrate with ITAB, combining the strengths of two equally positioned companies to deliver enhanced value to our customers and employees. This operation leverages our strong strategic and cultural alignment, unlocking significant synergies that will drive global value for our clients. Furthermore, the complementary geographical footprints of both organizations will facilitate a powerful alliance, positioning us as the leading solutions provider in the market", says Walter Ceglia , President & CEO of HMY.

Strategicrationale
For ITAB it is of strategic importance to accelerate expansion and use the extended reach and scale to invest in new capabilities that will improve sales of Retail Technology and services through solutions developed together with the customers. ITAB believes the industry will mature significantly the next few years and more and more value will come from connected products and services to retailers. The intended acquisition will provide significant increase in scale and relevance to ITAB's customer base, strengthen ITAB's footprint in the Western and Southern European retail markets as well as provide geographically complementary advantages given HMY's presence in especially Spain, France, the Middle East and South America.

In addition, the intended acquisition of HMY will provide complimentary capabilities in terms of sales strategies with regards to its differentiated Brand & Retail segment and open opportunities for cross-selling ITAB's broader portfolio. The broader and complementing combined product offering and geographic reach is expected to create significant cross-selling opportunities to the combined customer base.

Furthermore, potential annual synergies of EUR 30 million[11] are expected to enhance organic sales growth and EBITDA margins in the combined entity and drive earnings per share (EPS) returns. The synergies are expected to come from increased internal efficiency, combined procurement and cross-selling, especially of Retail Technology and Brands & Retail products.

Financial terms, combined financial overview and impact on ITAB's financials
The purchase price of EUR 320 million (approximately SEK 3,613 million), on a cash and debt free basis represents a multiple of 6.4x HMY's adjusted EBITDA for the financial year 2023, and 4.0x after accounting for anticipated pre-tax synergies of EUR 30 million, had such synergies been realized during the financial year 2023.

HMY - Reported historic financial information[12]

MEUR FY21A FY22A FY23A
Sales 483.5 581.0 541.2
% growth 30.5% 20.2% (6.9%)
Adjusted EBITDA[13] 39.5 57.1 50.3
% margin 8.2% 9.8% 9.3%
Adjusted EBIT[14] 19.5 34.7 27.1
% margin 4.0% 6.0% 5.0%
Net Income (excluding interest expenses)[15] 12.6 23.5 13.3
% margin 2.6% 4.0% 2.5%
Net Income (reported) (15.3) 1.4 3.4
% margin n.m. 0.2% 0.6%

ITAB - Reported historic financial information[16]

MEUR FY21A FY22A FY23A LTM Jun'24
Sales 539.1 608.3 543.8 566.1
yoy % growth 14.4% 12.8% (10.6%) (1.1%)
Adjusted EBITDA[17] 57.0 62.4 60.8 73.0
Depreciation (right-of (13.0) (13.6) (12.0) (12.0)[18]
-use asset)
Interest expenses (1.2) (1.2) (1.2) (1.2) 18
(lease liabilities)
Adjusted EBITDA pre 42.9 47.6 47.5 59.7
-IFRS 16
(illustrative)17
% margin 8.0% 7.8% 8.7% 10.5%
Adjusted EBIT17 33.8 39.2 38.3 51.6
% margin 6.3% 6.5% 7.0% 9.1%
Net Income (reported) 8.4 21.5 25.9 35.3
% margin 1.6% 3.5% 4.8% 6.2%

Combined financial information (FY23A)

MEUR ITAB HMY Synergies[19] Aggregated[20]
Sales 543.8 541.2 20.0 1,105.0
Adjusted EBITDA pre 47.5 50.3 30.0 127.8
-IFRS 16
(illustrative)
% margin 8.7% 9.3% n.m. 11.6%
Adjusted EBIT 38.3 27.1 30.0 95.4
% margin 7.0% 5.0% n.m. 8.6%
Net income 25.9 13.3[21] 22.5 49.2[22]
% margin 4.8% 2.5% n.m. 4.5%

The sales breakdown for HMY by category includes Food (47 per cent), Brands & Retail (44 per cent) and DIY (8 per cent). Geographically, South Europe accounts for 48 per cent of revenue, West Europe for 27 per cent, and other regions for the remaining 25 per cent.[23]

The sales breakdown for ITAB by category includes Food retail (53 per cent), Specialty retail/other (25 per cent), DIY (13 per cent) and Non-food retail (10 per cent). Geographically, Northern Europe accounts for 25 per cent of revenue, Southern Europe for 23 per cent, Central Europe for 19 per cent, United Kingdom and Ireland for 11 per cent, Eastern Europe for 8 per cent and other regions for the remaining 15 per cent.[24]

The combined company would have aggregated annual sales amounting to approximately EUR 1.1 billion (SEK 12.5 billion) including estimated run-rate synergies, with an adjusted EBITDA margin pre-IFRS 16 (illustrative) of approximately 11.6 per cent[25], during the financial year 2023 (on a full year combined basis) compared to 8.7 per cent for ITAB stand alone[26] [27].

One-off integration costs are estimated to be approximately EUR 21 million (SEK 240 million) over 3 years. Transaction costs (including costs for the Directed Share Issue) are estimated to be approximately EUR 10 million (SEK 113 million).

The transaction is strategically and financially compelling, and ITAB expects it to be highly accretive to ITAB's earnings per share (EPS) from completion, with an illustrative 64 per cent[28] earnings accretion for the financial year 2023 assuming a 100 per cent cash consideration (excluding any non-cash amortisation impacts). Additionally, the transaction is expected to be accretive to ITAB's organic sales growth and EBITDA margin.

The illustrative leverage ratio[29] after completion of the intended acquisition is expected to be 2.0x including synergies and 2.6x excluding synergies, based on financial year 2023 financials, with net debt amounting to EUR 259.0 million (SEK 2,924 million).

Financing and support from ITAB's shareholders
The transaction is intended to be financed through a combination of new debt and equity. ITAB has obtained a binding commitment letter regarding debt financing provided by Danske Bank, Nordea, and Swedbank, consisting of EUR 255 million long-term credit facilities, also aimed at refinancing certain existing debt of ITAB outstanding under the EUR 150 million long-term credit facility entered into with Nordea and Swedbank in June 2022. To further strengthen the financing capacity, the binding commitment letter also entails a EUR 100 million revolving credit facility, that can be used for general corporate purposes and refinancing of existing debt of ITAB outstanding under the above-mentioned EUR 150 million long-term credit facility. In addition, ITAB intends to raise approximately SEK 850 million through the Directed Share Issue to Swedish and international institutional investors through an accelerated bookbuilding procedure, as announced separately by ITAB today. The Directed Share Issue is intended to be carried out with deviation from the shareholders' pre-emptive rights, and to be resolved upon by the Board of Directors of ITAB, partly on the basis of the authorisation granted by the Annual General Meeting held on 15 May 2024, and partly subject to the subsequent approval by an Extraordinary General Meeting intended to be held on or around 21 October 2024.

ITAB's largest shareholders, Acapital ITAB HoldCo AB, Pomona-gruppen, Petter Fägersten, Anna Benjamin, Svolder AB and Stig-Olof Simonsson, together holding approximately 73 per cent of the outstanding shares and votes of ITAB, have expressed their support for the transaction and the Directed Share Issue and have entered into binding undertakings to participate in the Directed Share Issue with a total amount of up to SEK 306 million as well as to, together with members of the Board of Directors and management of ITAB together holding approximately 1 per cent of the outstanding shares and votes of ITAB, vote in favour of any relevant proposals at the Extraordinary General Meeting referred to above.

Exclusive negotiations, regulatory approvals and closing
The transaction is structured as ITAB granting a binding put option to the shareholders of HMY, by which ITAB agrees to acquire HMY at the option of the shareholders of HMY. HMY is owned by funds affiliated with LBO France and certain employees of HMY. The intended acquisition is conditional upon signing of a final and definitive share purchase agreement between ITAB and the shareholders of HMY, following an information and consultation procedure with the employee representative body of HMY. In addition, the intended acquisition is subject to approval by the relevant competition authorities as well as other customary closing conditions. Closing is expected to occur during the end of the fourth quarter 2024 or beginning of the first quarter 2025, and the purchase price is to be paid in connection therewith.

Advisors
Macquarie Capital acts as financial adviser in connection with the intended acquisition of HMY. Nordea and Swedbank act as Joint Global Coordinators and Joint Bookrunners in connection with the Directed Share Issue and Danske Bank, Nordea and Swedbank provide the debt financing facility. Squire Patton Boggs and Vinge act as legal counsel to ITAB on the intended acquisition of HMY. Vinge also acts as legal counsel to ITAB on the Directed Share Issue and the debt financing facility, and Roschier acts as legal counsel to the Joint Global Coordinators in connection with the Directed Share Issue and in connection with the debt financing facility.

Conference call
ITAB invites investors, analysts and the media to attend a conference call on 26 September 2024, at 10:00 a.m. CEST, where President & CEO Andréas Elgaard and CFO Ulrika Bergmo Sköld will describe the intended acquisition and answer questions related to this press release.

If you wish to participate via webcast, please use the following link:
https://ir.financialhearings.com/itab-shop-concept-investor-presentation-sep-2024

If you wish to participate via teleconference, please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.financialhearings.com/teleconference/?id=5005663

The conference call information will also be available at ITAB's website https://itabgroup.com/investors/financial-reports-presentations.

Jönköping, 25 September 2024

ITAB Shop Concept AB (publ)

This information is such that ITAB Shop Concept AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 6:00 p.m. CEST on 25 September 2024.

For further information, please contact:

Andréas Elgaard, President & CEO, ITAB Group
Telephone: +46-73 232 16 35

Ulrika Bergmo Sköld, CFO, ITAB Group
Telephone: +46-73 230 05 98

ITAB Shop Concept AB (publ), Box 9054, SE-550 09 Jönköping, Sweden
itab.com, itabgroup.com

[1] EUR/SEK FX rate of 11.290 as of 24 September 2024.

[2] Pre-IFRS 16 (French GAAP reporting); Extraordinary items are booked below EBITDA (total extraordinary result was EUR 9 million for the financial year 2023 and includes the cost of restructuring and exiting business activities); Adjusted EBITDA is defined as EBITDA excluding extraordinary items; Adjusted EBITDA margin is defined as adjusted EBITDA divided by sales.

[3] HMY's financial information is prepared in accordance with French GAAP and based on HMY's financial reporting which corresponds to HMY's consolidated trial balances.

[4] Comprises of EUR 20 million in cost synergies and EUR 10 million in EBITDA effect from commercial/revenue synergies of EUR 20 million, with full synergy effect expected to be reached by 2027 with gradual materialisation from financial year 2025 onwards.

[5] Assumes the Directed Share Issue (as defined below) pre any equity issue discount to share price as of 24 September 2024; Includes anticipated post-tax synergies of EUR 23 million (based on pre-tax synergies of EUR 30 million and an assumed tax rate of 25 per cent), had such synergies been realised during the financial year 2023; HMY's net income excludes interest expenses based on current capital structure and other financial charges (including inventory and doubtful receivables provisions); Assumes a tax rate of 25 per cent; Includes the impact of new debt issuance of EUR 255 million to finance the intended acquisition.

[6] EUR/SEK FX rate of 11.290 as of 24 September 2024.

[7] Pre-IFRS 16 (French GAAP reporting); Extraordinary items are booked below EBITDA (total extraordinary result was EUR 9 million for the financial year 2023 and includes the cost of restructuring and exiting business activities); Adjusted EBITDA is defined as EBITDA excluding extraordinary items; Adjusted EBITDA margin is defined as Adjusted EBITDA divided by sales.

[8] HMY's financial information is prepared in accordance with French GAAP and based on HMY's financial reporting which corresponds to HMY's consolidated trial balances.

[9] Assuming that HMY would have been part of ITAB during the same period. The combined financials include annualized synergies, excluding restructuring and rationalisation costs, of EUR 30 million, comprising EUR 20 million in cost synergies and EUR 10 million EBITDA effect from commercial/revenue synergies of EUR 20 million, with full synergy effect expected to be reached by 2027 with gradual materialisation from financial year 2025 onwards. See the section "Financial terms, combined financial overview and impact on ITAB's financials" for further information on the assumptions.

[10] Foundation of Hermès-Métal.

[11] 23 per cent of aggregated EBITDA for the actual financial year 2023.

[12] HMY's financial information is prepared in accordance with French GAAP and based on HMY's financial reporting which corresponds to HMY's consolidated trial balances; Extraordinary items are booked below EBITDA (total extraordinary result was approximately EUR 9 million for the financial year 2023 and approximately EUR 3 million for the financial year 2022 and 2021, respectively, and includes mainly the cost of restructuring and exiting business activities).

[13] Pre-IFRS 16; Excludes extraordinary items.

[14] Excludes extraordinary items.

[15] Excludes interest expenses based on current capital structure and other financial charges (including inventory and doubtful receivable provisions); Assumes a 25 per cent tax rate.

[16] Converted from SEK to EUR based on exchange rate of 11.290 as of 24 September 2024; Includes continuing operations only.

[17] Excludes non-recurring costs.

[18] Assumption based on financial year 2023 figures.

[19] Annualised synergies, excluding restructuring / rationalisation costs; Yearly pre-tax synergies of EUR 30 million assumed including EUR 20 million of cost synergies and EUR 10 million in EBITDA effect from commercial/revenue synergies of EUR 20 million; Full synergy effect to be reached by 2027 with gradual materialisation from FY25 onwards; Applied to financial year 2023 for illustrative purposes.

[20] The aggregated financial information presented in the table is for illustrative purposes only; HMY's financial information is prepared in accordance with French GAAP and is based on consolidated trial balances; The aggregated financial information is not financial pro forma and has not been audited or otherwise reviewed by the companies' auditors.

[21] Excludes interest expenses based on current capital structure and other financial charges (including inventory and doubtful receivable provisions); Assumes a 25 per cent tax rate.

[22] Includes impact of new debt issuance of EUR 255 million to finance the intended acquisition; Assumes a tax rate of 25 per cent for the Group.

[23] Sales breakdown based on management accounts.

[24] May not add up to 100 per cent due to rounding.

[25] Adjusted EBITDA margin pre-IFRS 16 (illustrative) defined as the sum of (i) reported EBITDA for HMY (French GAAP reporting, hence pre-IFRS 16) of SEK 568 million, with extraordinary items booked below EBITDA (total extraordinary result was EUR 9 million for the financial year 2023 and includes the cost of restructuring and exiting business activities), (ii) reported EBITDA for ITAB of SEK 686 million minus depreciation of right of use assets of SEK 136 million minus interest on lease expenses of SEK 14 million, and (iii) EUR 30 million of estimated annualized synergies.

[26] Adjusted EBITDA margin pre-IFRS 16 (illustrative) defined as reported EBITDA for ITAB of SEK 686 million minus depreciation of right of use assets of SEK 136 million minus interest on lease expenses of SEK 14 million.

[27] Assuming that HMY would have been part of ITAB during the same period. The combined financials include annualized synergies, excluding restructuring and rationalisation costs, of EUR 30 million, comprising EUR 20 million in cost synergies and EUR 10 million in EBITDA effect from in commercial/revenue synergies of EUR 20 million, with full synergy effect expected to be reached by 2027 with gradual materialisation from financial year 2025 onwards. See the section "Financial terms, combined financial overview and impact on ITAB's financials" for further information on the assumptions.

[28] Assumes the Directed Share Issue pre any equity issue discount to share price as of 24 September 2024; Includes anticipated post-tax synergies of EUR 23 million (based on pre-tax synergies of EUR 30 million and an assumed tax rate of 25 per cent), had such synergies been realised during the financial year 2023; HMY's net income excludes interest expenses based on current capital structure and other financial charges (including inventory and doubtful receivables provisions); Assumes a tax rate of 25 per cent; Includes the impact of new debt issuance of EUR 255 million to finance the intended acquisition.

[29] Leverage ratio is defined as net debt after acquisition excluding lease liabilities divided by combined adjusted EBITDA pre-IFRS 16; Based on financial year 2023 adjusted EBITDA pre-IFRS 16; Net debt is based on ITAB net debt as of December 2023 and EUR 255 million of new debt issuance to finance the intended acquisition.

IMPORTANT INFORMATION
This press release is not and does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any shares or other securities ("Securities") in ITAB in any jurisdiction, neither from ITAB nor from anyone else. This press release is not for release, distribution or publication, in whole or in part, directly or indirectly, in or into the United States, Australia, Belarus, Canada, Hong Kong, Israel, Japan, New Zealand, Russia, Singapore, South Africa, South Korea, Switzerland or any other jurisdiction in which the release, distribution or publication of this press release would be unlawful or would require registration or other measures. The distribution of this press release in other jurisdictions may be restricted by law and persons into whose possession this press release comes should inform themselves about, and observe, any such restrictions. Actions in violation of these restrictions may constitute a violation of applicable securities law.

This press release neither identifies nor pretends to identify risks (direct or indirect) that can be connected to an investment in Securities in ITAB. The information contained in this press release is for background purposes only and does not purport to be full or complete.

This press release is not a prospectus according to the definition in Regulation (EU) 2017/1129 (the "Prospectus Regulation") and has not been approved by any regulatory authority in any jurisdiction. ITAB has not authorized any offer to the public of Securities in any member state of the European Economic Area ("EEA"). Within the EEA, this communication is only addressed to and is only directed at "qualified investors" in each respective member state within the meaning of the Prospectus Regulation.

No Securities have been, and no Securities will be, registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or under the securities legislation of any state or other jurisdiction of the United States and, accordingly, may not be offered or sold in the United States except under an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities legislation in the relevant state or any other state of the United States. ITAB does not intend to register any part of the Directed Share Issue in the United States or to conduct a public offering of Securities in the United States.

In the United Kingdom, this press release and any other materials in relation to the Securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, "qualified investors" (within the meaning of the United Kingdom version of the Prospectus Regulation which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) who are (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order; or (iii) such other persons to whom such investment or investment activity may lawfully be made available under the Order (all such persons together being referred to as "Relevant Persons"). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, Relevant Persons. Persons who are not Relevant Persons should not take any action on the basis of this press release and should not act or rely on it.

This press release may contain forward-looking statements that reflect ITAB's current view of future events as well as financial and operational development. Words such as "intend", "assess", "anticipate", "expect", "may", "believe", "plan", "estimate" and other expressions involving indications or predictions regarding future development or trends, not based on historical facts, are intended to identify forward-looking statements and reflect ITAB's beliefs and expectations. Forward-looking statements inherently involve both known and unknown risks, uncertainties and assumptions which could cause actual events and performance to differ materially from any expected future events or performance expressed or implied by the forward-looking statement. The information contained in this press release is subject to change without notice and, except as required by applicable law or regulation, ITAB does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained in it and nor does it intend to. You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release. As a result of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements as a prediction of actual future events or otherwise.

Each of Macquarie Capital, Nordea and Swedbank is acting exclusively for ITAB and no one else in connection with the content of this press release and other matters described in this press release. Macquarie Capital, Nordea and Swedbank will not regard any other person as their respective clients in relation to the content of this press release and other matters described in this press release and will not be responsible to anyone (including any placees) other than ITAB for providing the protections afforded to their respective clients or for providing advice to any other person in relation to the content of this press release or any other matters referred to in this press release.