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FERRO Group, assisted by VCP Polska, implements an essential phase of its strategy by acquiring TERMET – provider of comprehensive systems for modern heating sources management

As part of the F1 Strategy, on 26th November 2020, Ferro Group concluded agreements, as a result of which it will become the majority shareholder of Termet (70,65%) and the exclusive owner of Tester. This transaction, by joining forces of Ferro, Termet and Tester, will create a strong group of Polish origin and a sound position in the CEE region, perfectly prepared to continue its expansion in the sanitary and installation fittings segment and, in particular, to compete in the attractive market of water consumption and heat source management.

The above deal fits perfectly in the framework of F1 Strategy, as it will allow Ferro Group to develop its operations by expanding the Group’s current product portfolio with a significant and dynamically developing complementary segment. The acquisition of Termet and Tester will enable entry into, among others, the attractive market of gas condensing boilers, which has recorded a dynamic value increase over the last few years, supported by long-term “eco” market trends and favourable regulatory environment. The Management Board of Ferro expects the complementarity of the offer and distribution channels to generate revenue synergies within the merged entities by creating a comprehensive offer for households. The transaction will contribute to further development of Ferro distribution network, by reinforcing it with another strong team of professional sales representatives and authorized installers, as well as increasing the presence of Ferro Group in the Western European markets.

The acquisition of Termet and Tester is one of the key elements of Ferro Group’s F1 Strategy. It fits perfectly into each of the 4 major strategic initiatives. It is crucial for us that the transaction will bring together entities with a strong market position in their segments. We see much potential for synergies here. Termet is an acknowledged, recognizable Polish brand with a rich portfolio of highly valued products, own design know-how, patent protection and production facilities – a very well-equipped and organized plant in Świebodzice with its own R&D center. Additionally, it has a team of highly qualified specialists, also in the area of ​​post-sales service. It is extremely important to us that the experienced Termet team, which has been successfully managing this business for many years, will continue to develop the company within the Ferro Group in Poland and in the region. We are acquiring a healthy, well-run company with an offer fitting perfectly in the market trends of modern heat source management and energy efficiency. We see large potential in this segment, related to the increase in environmental awareness and favorable regulatory background. We are convinced that the transaction will intensify the implementation of strategic projects and enrich the offer of Ferro. We will strengthen our competences in the full process, starting from design and construction, through production and sales to post-sales services. The Group’s portfolio will be complemented with system solutions in the area of ​​ecological heat and energy, constituting an interesting offer not only for end customers, but also for professionals, which opens up additional sales opportunities for other products from the Group’s current portfolio. – says Wojciech Gątkiewicz, President of the Management Board of Ferro.

– Joining forces with Ferro is a new opening for Termet, guaranteeing the company’s future progress. We plan to strengthen our position in Poland, but above all to use Ferro’s experience in foreign markets for further business development, which is proven by the dynamic growth and strong position of the Group in CEE. Termet, as a solely Polish company, will continue its business activity in the current location in Świebodzice, where the key asset is not only our production facility, but above all our highly qualified staff. Quality has always been and will be the motto of our Company, which is confirmed by the loyalty and recognition of customers as well as numerous awards and distinctions. We are convinced that thanks to merger with Ferro, customers in new markets will soon discover the quality of our products. The transaction will strengthen Termet’s position in distribution channels in which we have been less visible so far and will enable the optimal use of market trends in the field of clean energy and heat solutions together with a strong capital partner, such as Ferro. We are motivated to continue working for the development of the Company and the entire Group. – says Ryszard Satyła, President of the Management Board of Termet.

TERMET is a supplier of modern heating devices – from the design stage, through production, professional distribution and service. Termet’s offer includes various types of gas boilers – condensing and standard, water heaters and solutions based on renewable energy sources, including heat pumps. Termet carries out a full R&D cycle, has its own design and construction office and a research laboratory where new production technologies and product construction documentation are developed. Numerous technological solutions of Termet are protected by patents. Tester deals with the design, production and sale of electronic control and automation systems for gas devices as well as the production and processing of specialized piping systems for the heating and cooling industry. An important recipient of Tester’s devices is Termet. Total revenues and EBITDA of the acquired companies for 2019, calculated for the purposes of the transaction, amounted to PLN 126 million and approximately PLN 10 million, respectively. The companies employ over 300 people in total.

The closing of the transaction will be preceded by an audit of the acquisition of Termet by the Office of Competition and Consumer Protection, which will be concluded with a decision on concentration. This procedure may take up to several months. The total base value of the Termet and Tester acquisition amounts to PLN 50.75m. It may be increased by an additional amount, depending on Termet’s financial results for 2020 (Earn-out), in the maximum amount of PLN 9.97 million.

VCP Polska acted as an exclusive investment banking advisor to Ferro Group.

Source: FERRO Group, 26/11/2020

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