ÅF makes its “platform” acquisition with Poyry
ÅF is to acquire Finland-headquartered Poyry, for EUR 611m in cash. The company is offering a premium of 46% over the last trading day of Poyry. ÅF will launch a capital increase to finance the all-cash deal and intends to return to its target of a net debt to EBITDA ratio of 2.5 by the end of the year 2020.
Poyry is an engineering service vendor active in energy, manufacturing, and infrastructures. The company also has a management consulting unit. Poyry had in 2017 revenues of EUR 553m.
The acquisition brings scale to ÅF, which will have combined revenues of LTT SEK 19bn (~USD 2.1bn in revenues), 14.5k FTEs and a LTT adjusted EBIT margin of 8.5%.
Once the transaction is completed, ÅF will change its new organization to five divisions:
- Process industries
- Industrial and digital solutions
- Management consulting.
Our first reaction is that ÅF has decided to increase its exposure to infrastructure engineering, which as part of its Infrastructure Division has been its major growth driver for years. It will need to turn around Poyry’s infrastructure unit, which has been less successful than ÅF. The Energy unit of Poyry should help ÅF, which has struggled for years in this space and recently executed a turn around in its Nordics operations. We will need to go deeper into the Industry capabilities that Poyry brings.
Poyry brings a presence in Finland, where ÅF was little present. This is line with the strategy of ÅF to increase its presence in Nordics. Poyry is more internationalized than ÅF and will bring further scale and profitable operations outside of the Nordics.
ÅF is strengthening both its infrastructure and manufacturing engineering and Nordics profiles, and this acquisition is about scale. ÅF is now larger than rivals such as Sweco and Ramboll. Also, the infrastructure and energy engineering elements of its portfolio diminish its exposure to the Indian ER&D competition.
Stay tuned. We will be commenting further on this acquisition.