HMS Networks Expands Portfolio with Acquisition of PEAK-System

A Strategic Acquisition by HMS Networks

HMS Networks AB (publ), a leader in industrial information and communication technology, has recently made a significant move by entering into a binding agreement with DOGAWIST-Investment GmbH to acquire all shares of PEAK-System Technik GmbH. This acquisition marks a pivotal moment for HMS as it broadens its horizons within the industrial communication sector, especially in the automotive domain.

Details of the Acquisition

The agreement entails a cash deal valued at EUR 69 million, effectively around SEK 780 million, calculated on a cash and debt-free basis. This strategic maneuver is aimed at fortifying HMS’s position in the market for advanced communication solutions. PEAK-System, known for its innovative contributions, particularly within automotive standards, has been a reliable partner in the industrial communication landscape.

Anticipated Earnings Impact

Analysts within HMS anticipate that the acquisition will be beneficial to its earnings per share as soon as the deal is finalized. The integration of PEAK-System's expertise and product offerings is expected to enhance HMS's financial standing, excluding any impact from non-cash amortization.

What PEAK-System Brings to the Table

Founded in 1999 and headquartered in Darmstadt, Germany, PEAK-System has established itself as a prominent player in the field of industrial communication solutions. The company specializes in both hardware and software approaches, catering primarily to the automotive sector. This strategic acquisition opens doors for HMS to leverage PEAK-System's innovative products and expertise, enhancing its own offerings.

Global Reach and Market Distribution

PEAK-System boasts a well-distributed sales structure, with 50% of its revenue generated in Europe, complemented by a healthy 25% from both Asia and the United States. This international reach will be valuable for HMS as it seeks to expand its footprint and serve a more extensive customer base.

Synergies and Strategic Fit

The acquisition is not just a financial investment; it's a strategic alignment between HMS's existing Business Unit Ixxat and PEAK-System. There are numerous synergies to be explored, especially in product development and cross-selling opportunities. The merger will enhance HMS’s overall global presence in automotive communication, a critical market segment, particularly in Germany.

CEO’s Perspective

Staffan Dahlström, CEO of HMS Networks, expressed enthusiasm over the acquisition, highlighting the complementary nature of PEAK-System's product portfolio with HMS's current offerings. He emphasized the potential for increased collaboration and customer solutions stemming from this partnership. Dahlström stated that this acquisition is an exciting development for HMS, signaling a new chapter for the company as they integrate the talents and innovations of PEAK-System.

Financial Ramifications

PEAK-System's financial performance has been robust, with reported sales nearing EUR 25 million and an adjusted EBITDA margin of approximately 30%. The costs associated with the transaction and integration are expected to amount to around SEK 10 million, affecting financials through 2024 and 2025. Financing for this acquisition will come from a blend of existing arrangements along with a fresh term loan worth EUR 30 million underwritten by Skandinaviska Enskilda Banken AB (Publ) and Swedish Export Credit Corporation.

Conclusion: A Win-Win for HMS

The deal with PEAK-System is poised to deliver long-term benefits for HMS Networks, sharpening its competitive edge in the industrial ICT landscape. By integrating PEAK-System’s technological capabilities, HMS is not merely acquiring a company but enhancing its offering and positioning itself as a more formidable player in the industry.

Frequently Asked Questions

What is the main purpose of HMS Networks acquiring PEAK-System?

The acquisition aims to strengthen HMS’s offerings in industrial communication solutions, particularly in automotive technologies.

What financial impact is expected from this acquisition?

The acquisition is projected to be accretive to HMS's earnings per share from the completion of the deal, excluding non-cash amortization.

Where is PEAK-System based, and what is its expertise?

PEAK-System is based in Darmstadt, Germany, specializing in hardware and software solutions for industrial and automotive communication.

What are the expected synergies from this acquisition?

HMS expects synergies in product development and cross-selling opportunities between its Ixxat business unit and PEAK-System.

How will the acquisition be financed?

The acquisition will be financed through existing credit facilities and a new term loan provided by Skandinaviska Enskilda Banken AB and Swedish Export Credit Corporation.

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