NIBE Acquires WaterFurnace for $30.60 Per Share

Swedish based NIBE Industrier AB, one of the leading heat pump manufacturers in Europe, has launched a takeover bid for WaterFurnace Renewable Energy (WFI – $30.40), one of the market leaders in the North American geothermal heat pump heating and cooling solutions market.

WaterFurnace shareholders will receive $30.60 per share in cash in a transaction valued at approximately $378 million.

We first featured WaterFurnace on Smallcaps in June of 2013, when we interviewed Rick Hoffmann, the Company’s VP Administration. At that time WFI’s stock traded at $20.25. So investors who picked up some shares a year ago, are looking at a 50 percent profit.

In order to complete the transaction, at least two-thirds of WaterFurnace Shareholders must vote in favor at a special shareholders meeting, which is expected to be held in August 2014. The Board of Directors and management of WaterFurnace, along with members of the Shields family, collectively holding approximately 25% of WaterFurnace’s shares, have already agreed to vote in favor of the transaction.

NIBE-WaterFurnace Combination

NIBE is an international heating technology company. Operations are organised around three business areas – NIBE Element, NIBE Energy Systems and NIBE Stoves. The group has more than 9,000 employees and carries out business operations in Europe, North America, Asia and Australia. In 2013, net sales and operating profit (EBIT) amounted to SEK 9,834 million (US$1,461 million) and SEK 1,179 million (US$175 million) respectively.

Founded in 1983, WaterFurnace has a longstanding track-record as a premier brand and manufacturer of geothermal heat pump heating and cooling solutions in North America. The company’s product offering includes a range of geothermal heat pumps, smart control systems, hot water storage tanks and indoor air quality solutions. Products are marketed under the WaterFurnace and GeoStar brands in North America, and the WFI brand via a joint venture in China.

In the financial year 2013, WaterFurnace achieved net sales of $119 million and net earnings of $13.68 million. Approximately seventy percent of net sales account for residential products, both retrofit and new construction, with the remainder representing solutions for commercial use. Headquartered in Fort Wayne, Indiana (USA), WaterFurnace has 267 employees.

NIBE, as well as WaterFurnace have leading positions in their respective European and North American home markets. In view of the high pace of technology development and market consolidation, both companies believe that they together will operationally and strategically be better positioned to take a lead in the industry’s development. WaterFurnace will immediately be accretive to NIBE’s earnings.

Gerteric Lindquist, CEO of NIBE commented: “This transaction is NIBE’s largest to date in North America and further elevates our position as one of the global market leaders in sustainable energy solutions. Following our successful expansion of our Elements Division in the United States, the teaming up with WaterFurnace represents a strategic match and bridgehead into North America also for our largest business area Energy Systems.”

Conclusion

Because the holders of more than 25% of the outstanding shares have already agreed with offer, the proposal is very likely to be approved at the shareholders meeting in August. So we have to part from a nice a fairly unique public company.

Unfortunately, NIBE isn’t listed on a North American exchange. That should be a priority of the Company, especially in light of this acquisition. So when you want to become a NIBE shareholder at this moment, you’ll have to buy shares on the NASDAQ OMX (Nordic) market.

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