Jenoptik has acquired 100 per cent of the shares in Trioptics for an undisclosed sum, which the company anticipates will strengthen its Light and Optics division.
The transaction will be made in two steps. Initially, Jenoptik will acquire 75 per cent of the shares in Trioptics. According to Jenoptik, the funds for the transaction stem from the borrowing of capital at very favourable conditions. In addition, an earn-out was agreed for the sellers of Trioptics, which is based on the attainment of certain growth and profitability targets in the first two years after completion of the transaction.
The remaining 25 per cent will be acquired on December 31 2021, subject to conditions precedent.
'We are using bridge financing to cover the entire transaction, thereby protecting our strategic liquidity reserve,' said Hans-Dieter Schumacher, chief financial officer of Jenoptik. We have received a binding financing commitment for the acquisition from Landesbank Baden-Württemberg, one of our longstanding financial partners. On completion of the Trioptics acquisition, we will continue to have a very healthy balance sheet and a sound financial position. Our ability to generate strong cash flows is likely to improve further as a result of the transaction.'
Trioptics is a supplier of test equipment and manufacturing systems for optical components and sensors in the digital world. The company, based in Wedel near Hamburg, has more then 400 employees worldwide – of which around 100 in research and development –, and in 2019 generated revenue of around 80 million euros, with an operating margin before depreciation of around 27 per cent. Over the last four years, the company achieved on average annual growth (CAGR) of 17 per cent.
CEO, Eugen Dumitrescu, and CTO, Stefan Krey, will continue to work in their positions for Trioptics under the Jenoptik umbrella.
Increased presence in Asia
Trioptics has a very strong presence in European and Asian markets with own subsidiaries. The company generates more than half of its revenue in Asia. This will allow Jenoptik to expand its existing market shares in strategic markets such as China, Japan, and Korea.
In addition, the Group is strengthening its position in California and Florida, and will be able to offer a greater range of products and services to major American customers in the digital and communications area. The acquisition will create significant economies of scale in the core markets, thus strengthening Jenoptik’s business model.
Light and Optics
The acquisition of Trioptics strengthens the Jenoptik Group’s focus on high-growth industries of the future and opens up an even greater range of applications. As a supplier of equipment used to test optical components and sensors, Trioptics has good market access to many smartphone and camera manufacturers and their suppliers, among others. With these, the company is generating a major part of its revenue. Its integration will enable Jenoptik to better scale its existing test equipment business in the Light and Optics division.
The acquisition also bolsters Jenoptik’s development into a market leader for innovative test solutions for optical sensors in attractive growth markets, where annual growth rates of between six and 15 per cent are expected over the next years.
The two companies’ combined expertise in optics and industrial imaging will enable them to further expand their technological leadership and gain market share, for example in the growing markets for new virtual and augmented reality applications in both the industrial and consumer segments. In the automotive industry, the expanded portfolio for manufacturing precision optical components and systems offers considerable potential, particularly in view of the growing importance of driver assistance systems and new mobility concepts in the field of autonomous driving, for which improved image and data acquisition is essential.
Stefan Traeger, Jenoptik president and CEO, commented: 'The acquisition of Trioptics is a major step in Jenoptik’s strategic development and in the process of focusing on optics and photonics. We are accelerating our profitable growth, thus placing our business on a broader and more international footing. This transaction will allow us to offer our customers a more comprehensive range of products and services for applications in the digital world. This will enable us to tap additional potential for growth in the areas of mobile data acquisition and transmission, as well as in innovative human-machine interfaces in the automotive and industrial markets, among others. The transaction also makes us less dependent on individual business cycles and customers.'
High generation of cash flows
Thanks to its high profitability and free cash flow generation, Trioptics will impact positively on earnings and financial strength of Jenoptik already in the current year – depending on the date of first-time consolidation and without taking PPA effects into account. Substantial synergies are expected not only from the expanded technological know-how, but also from cost effects and economies of scale resulting from the expansion of leading market positions and the intensified cooperation with important global Tier 1 companies.
The complementary portfolios will allow to offer a broader range of measuring systems, as well as production facilities for sensor solutions and optical microcomponents, which over the long term might be reflected in economies of scale and thus revenue synergies worth more than 50 million euros.
The acquisition was approved by the Jenoptik supervisory board, but is still subject to approval by the German Bundeskartellamt. Closing is expected in the 3rd quarter 2020.
