Brockhaus Technologies AG: High value realization through sale of Palas

• BKHT and Palas management sell 100% of shares in Palas to Swedish technology and industrial group Indutrade AB at a valuation of €100 million.
• Proceeds from sale for BKHT of c. €59 million at closing, plus forward-looking earn-out components for the years 2023 and 2024; a multiple of the €18 million of equity invested at acquisition of Palas in 2018.
• Forecast adjusted to revenue before PPA of €130 to 135 million due to deconsolidation of Palas. Adjusted EBITDA margin forecast unchanged at 35%.
• Proceeds to be used for further expansion of the technology group and increase in shareholder value.

Frankfurt am Main, November 24, 2022. Brockhaus Technologies AG (BKHT, ISIN: DE000A2GSU42) sells its 70% share in the particle measurement specialist Palas. The buyer is the Swedish technology and industrial group Indutrade AB. The contract was signed today, November 24, 2022, and closed on the same day. The proceeds from the sale amount to a multiple of the equity invested in 2018 and are to be used for further expansion of the technology group and increasing shareholder value.

The sale is based on a valuation of Palas of €100 million, which reflects the high attractiveness of the company. The purchase price derived from this valuation is divided into several tranches. A first tranche was paid directly with today's signing of the contract. Two further tranches will follow in a future-oriented earn-out and are dependent on the further success of the company. The earn-out is based on the adjusted EBIT of Palas in 2023 and 2024. The first tranche paid today amounts to c. €59 million (corresponding to c. €5.38 proceeds per share). The two earn-out tranches can generate up to €16.7 million in additional sales proceeds.

Brockhaus Technologies acquired a majority stake in Palas in December 2018 with an equity investment of €18 million. This sum consisted of €15 million in cash and cash equivalents and €3 million worth of BKHT shares. The sales proceeds generated now thus correspond to a multiple of the acquisition costs.

Further expansion of the Technology Group planned through new acquisitions

With this transaction, BKHT demonstrates its ability to identify attractive businesses with further potential, unite them under one roof, develop them further and thereby achieve significant increases in value. During its four years as part of Brockhaus Technologies, Palas broadly doubled its revenue, EBITDA and EBIT. The number of employees increased from around 70 to over 100 during the same period. At the same time, with the help of BKHT, Palas took its first steps abroad by establishing subsidiaries in Hong Kong and Shanghai. This success story is the result of Brockhaus Technologies’ strategy, to actively support subsidiaries in internationalization and the setup of scalable structures viable for growth. To achieve this, BKHT provides to subsidiaries its long-standing experience, its broad network as well as strategic knowledge transfer.

The proceeds from the sale shall now be used for further acquisitions. Doing so, Brockhaus Technologies will continue to focus on high-margin and high-growth technology and innovation leaders in the German SME sector.

"We are very pleased with the successful transaction. We are thereby realizing value for our shareholders and are placing Palas in the best possible hands. I would like to thank the entire team at Palas for their impressive efforts. With the proceeds now flowing our way, we want to create further value for our shareholders. The stronger equity base means that shareholders do not need to fear dilution. Our list of potential acquisition candidates is always well filled. We are working meticulously with our proven methods to identify and acquire the best companies possible. That’s what we call “elevating champions”!" commented Marco Brockhaus, founder and CEO of Brockhaus Technologies.

Further strategic potential for Palas as part of a global industrial group

Indutrade was able to convince the previous shareholders of Palas with a clear strategic vision and clearly prevailed in the field of prospective buyers. With its "Measurement & Sensor Technology" business segment, Indutrade already has an extensive portfolio of measurement technology specialists and thus offers the corresponding expertise. It also ensures that Palas retains the entrepreneurial independence that has made it strong.

Strong increase in net profit and cash flow in 2022; forecast adjusted solely due to deconsolidation of Palas

The successful sale of Palas results in a significant increase in BKHT's cash and cash equivalents. Also, net profit and cash flow of fiscal year 2022 will increase. Net debt leverage decreases from 2.3x adjusted EBITDA to preliminary c. 1.1x as compared to last reported. As a result of its sale, Palas will be de-consolidated from the consolidated financial statements of Brockhaus Technologies as per the date of disposal. Revenue, further income and expenses of Palas, until the date of the sale, will be presented in BKHT’s consolidated income statement as a discontinued business and therefore, will no longer be included in the group’s revenue, further income and expenses.

Only due to this deconsolidation, BKHT adjusts the forecast for fiscal year 2022 to revenue before PPA between €130 and 135 million. Without the sale of Palas, the previous forecast of €150 to 155 million would have remained valid. With regard to the adjusted EBITDA margin, BKHT confirms the previous forecast of 35%.

Against the background of the transaction, the Company invites analysts and investors to a conference call on Tuesday, November 29, 2022, at 10:00 a.m. (CET). As usual, the conference call will be held in English. Interested parties can register for the call at the following link: https://webcast.meetyoo.de/reg/0LKyKafzLqtw

About Brockhaus Technologies

Based in Frankfurt am Main, Brockhaus Technologies AG (BKHT, ISIN: DE000A2GSU42) is a technology group that acquires high-margin, high-growth technology and innovations champions with B2B business models in the German Mittelstand. With a unique platform approach and a long-term horizon, Brockhaus Technologies actively and strategically supports its subsidiaries in achieving profitable long-term growth, both across industries and internationally. At the same time, Brockhaus Technologies offers a gateway into these non-listed German technology champions, which are otherwise inaccessible to capital market investors. For further information, please visit www.brockhaus-technologies.com

Contact information

For investors:

Paul Göhring

Phone: +49 69 20 43 40 978

Fax:  +49 69 20 43 40 971

E-Mail:  [email protected]

For media:

GFD - Gesellschaft für Finanzkommunikation
Phone:  +49 69 97 12 47 33

Fax:  +49 69 97 12 47 20

E-Mail:  [email protected]