Daetwyler to buy Britain’s Premier Farnell for $871mn

Bloomberg

Daetwyler Holding AG, a Swiss provider of engineering and industrial parts, agreed to buy Premier Farnell Plc of the U.K. for £615 mn ($871 million) in a deal aimed at consolidating the fragmented European market for electronic-component distribution.
Investors will get 165 pence in cash for each Premier Farnell share, the company said in a statement on Tuesday. That’s 51 percent higher than Monday’s closing price. They will also receive the proposed final dividend of 3.6 pence a share. Shares of the U.K. supplier of calculators to circuit breakers surged as much as 50 percent to 163.75 pence in London, where the company is based, while Daetwyler fell as much as 5.6 percent in Zurich.
“The acquisition is in line with Daetwyler’s strategy and strengthens significantly its position in high-service electronic components distribution,” said Fabian Haecki, an analyst at Vontobel, who covers Daetwyler. “This transaction comes however at a steep price. Still, we like the strategic rationale.”
Daetwyler, whose customers include power-systems manufacturer ABB Ltd. and machinery maker OC Oerlikon Corp AG, has been on the hunt for acquisitions to bolster its businesses. Chief Executive Officer Paul Haelg has signaled he wanted to expand in the U.S., Asia and other European markets. The century-old Swiss company has shifted production to China and Germany.
Bid Backing
The combination “represents a strong strategic fit and is highly attractive,” Premier Farnell said in the statement, adding that its directors unanimously back the offer. The transaction will bring together companies with complementary product ranges, distribution channels and geographies operating within a market worth as much as 40 billion francs ($42 billion), it said.
Alone, Premier Farnell faced further restructuring to improve efficiency and lower costs to contend with an increasingly competitive market, its chairman, Valerie Gooding, said in the statement. Combining with Daetwyler will help address the need for added scale, she said. A large part of the value of the expected synergies will be awarded to the Premier Farnell’s shareholders, Vontobel’s Haecki said in a note.
Premier Farnell shares traded 50 percent higher at 163.50 pence as of 9:53 a.m. in the U.K. capital. Daetwyler declined 4.4 percent to 133.80 Swiss francs. Electrocomponents Plc, an Oxford-based competitor, climbed as much as 3.8 percent.