Good day and thank you for standing by. Welcome to the Solar acquisition of Sonepar Norway conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may also submit your questions on the webcast at any time by typing them in the question box and click submit. Please note that today's conference is being recorded. I will now like to turn the conference over to your speaker, Jens Andersen, CEO. Please go ahead, sir.
Thank you. A warm welcome to this extraordinary webcast. Together with me here in Vine, I have my colleague, CFO Michael Jeppesen. As announced this morning, we have signed an agreement with Sonepar to acquire Sonepar Norway. Indeed, a transformative step for Solar Norway as well as the Solar Group. Could we please go to page one? The acquisition of Sonepar Norway is a bolt-on deal, positioning the combined businesses as one of the leading electrical distributors in the Norwegian market, offering efficient sourcing and services, mainly within electrical, ventilation, and climate energy solutions. Together, the two, or in the future, one company will offer a portfolio of 25,000 SKUs or products and generate an annual revenue of approximately DKK 2.5 billion. The history of Solar Norway goes back to year 2000. At that time, we acquired the company from Siemens, who strategically wanted to step out of electrical distribution.
As I recall it, the revenue at that time was around DKK 600 million. Since then, the company has tripled the revenue organically, mainly on industry, to DKK 1.8 billion and always been a good contributor to our earnings in a very or very highly competitive market. We are convinced that this transformative step up for Solar Norway is a new chapter in our history in the Norwegian market. With our automated central warehouse facilities in Solar Norway, based on AlphaStore and recently updated with SAP for HANA as ERP system, our ability to create economic scale is stronger than ever. We expect significant opportunities to develop this combined business, drive growth, and enhance earnings over the coming years. I will now give the word to Michael. Please, Michael.
Thank you, Jens. Please turn to slide number three. As Jens also stated, we are very pleased with this opportunity. There are several good reasons for this. Firstly, Sonepar comes with highly skilled employees, combined with a platform that enables us to strengthen our position, mainly within installation, but also to a lesser extent within industry, meaning we see this as a perfect fit. We know from past experience that Solar and Sonepar share the same common values, making the integration a lot easier, not only for the employees in both companies, but also for the customers that we serve. I do actually meet former Sonepar employees every day here in Vine, so it is really culturally wise also a perfect fit. As we speak, we are finalizing the plans for swift integration to ensure that we deliver on the promised benefits before the end of H1 2026.
As always, in these cases, we need to await the approval from the competition authorities. We expect this to follow shortly, enable us potentially to close the deal early December this year. Please turn to page number four. From a customer perspective, we also see the integration to carry substantial benefits, as we together have a stronger network of branches, ensuring a strong presence locally. There is, of course, an overlap, meaning that in some locations, Solar will move to Sonepar; in other locations, Sonepar will move to Solar, or in some instances, to a completely new location, depending on what is the best fit. As Jens also touched upon briefly, this enables us to increase our product offer not only by expanding the number of available products that we make available to the market, but also to increase the depth within the articles we hold on stock.
In addition to this, the customers of Sonepar will, in the future, gain access to our concepts and our solution selling, which also should give them new and interesting opportunities. Although Sonepar actually is a highly digitalized company, we do believe that the combined business will benefit from the improvements of all the investments we have made, in the recent years in upgrading our systems, but also in the investments to come that Solar will do in the future. We do truly believe in our payoff stronger together. From a customer perspective, we expect one plus one to actually give three. Thank you.
Thank you, Michael. Now it's time for questions. If you have any, please.
Thank you. As a reminder, to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question on the webcast, please type them in the question box and click submit. Thank you. We are now going to proceed with our first question. The questions come from the line of Christian Tono from SEB. Please ask a question. Your line is opened.
Yes, thank you. A couple of questions from my side. Firstly, on these DKK 60 million in synergies, can you elaborate what they are based on?
Yes. We have done a thorough analysis of the situation, and it will gain us some scale efficiency both within the IT, but also within the operations and our distribution setup. If you drive a truck, you pay the same whether it's 50% filled up or whether it's 70% or 90% filled up. The price tag is basically the same. As you know, on average, that has a carrier cost of like 4% of our revenue approximately that we're spending on this. We can say the additional revenue will travel almost for free. We need to be merging the departments together and thereby also gain benefits. In addition, we also expect to get additional benefits from the upstream because in particular within installation, this will really strengthen our business rather substantially. We're fairly comfortable with this since it's almost only based on cost synergies.
Our AlphaStore solution can easily, I would say, put 10% to 20% more volume through the AlphaStore without any further expansion on employees. At least the cost to serve there is pretty low.
Okay. Maybe to follow up, you have a central warehouse. Sonepar Norway has a central warehouse. Will you need two central warehouses? If not, is there any potential for sort of material asset divestments in this process as well?
There are no assets to be disposed of. Sonepar's facilities are rented, and the runway on that rental agreement is not that long, so it's actually a perfect fit. Of course, we will over time move to one where we have in principle only one central warehouse running, and we do hold the capacity to do it.
Okay. Makes sense. You highlight NOK 700 million in revenue for Sonepar Norway and NOK 1.8 billion for your Norwegian business. How much of an overlap is there? I guess what I'm asking is the cannibalization risk here.
There is a cannibalization risk, but it's fairly limited the way we see it. You cannot completely rule out that there will be some cannibalization. We have a reasonable idea, but you also know due to competition law that we cannot get a completely clear picture of this with names and everything else in it. There is a minor risk, definitely, Christian. We think the case can also absorb a minor risk. It also holds some opportunities the other way around, where we can actually gain additional sale to existing customers at Sonepar, but also the other way around because Sonepar also brings in the ability for us to sell new products to existing customer base. I think it's a plus and minus game here.
The number of products at least is doubled up compared to the Sonepar situation today. We are approximately at 25,000 now. They are 12,000. We'll see how much we need to have on our shelves going forward in order at least to increase the basket size or share of wallet at existing customers, but also Sonepar customers.
That makes sense. That makes sense. Maybe just the last question from my side. Were there any other potential suitors here? I mean, how much of the structured process has there been from Sonepar's side?
The truth is we don't know.
No.
You have to ask Sonepar about that. They will tell you probably not. We have no idea.
No clue at all.
No clue.
Fair enough. Excellent. Congratulations.
Thank you. Thank you.
As a reminder to ask a question on the phone, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one and one on your telephone and wait for your name to be announced. If you wish to ask a question on the webcast, please type them in the question box and click submit. Thank you. We are now going to proceed with our next question. Questions come from the line of Alexander Boriskov from DNB Carnegie. Please ask your question.
Yes, thank you. Maybe just to follow up on Christian's question on warehousing. If I remember correctly, you rented extra warehouse capacity in Norway before you announced this acquisition. If you are to move towards one central warehouse, will you need to increase capacity in your existing warehouse, or will you go out and need to rent additional capacity, or how does that sort of stack up?
The short answer is no.
No.
We have sufficient.
We have sufficient capacity.
Okay. The other side.
Over time, you also have land for building more or extending the existing warehouse in Gardermoen. We still have further land, maybe in 5 or 10 years from now. So far, so good.
Okay. That's very clear. Maybe just one more question from my side. Do you see any similar assets to Sonepar Norway in Sweden and/or the Netherlands that would be of interest to you going forward?
We always have a heat map looking into the different markets, but at the moment, no. If we will keep it to ourselves, I have to be honest.
We wouldn't share.
We won't share it, but of course, we have a heat map, yes.
We follow that.
We follow that closely.
Okay. Thank you. That's very clear. That's all for me.
Okay, thank you.
Thank you. We have no further questions on the phone line, so I'll hand back to you for any webcast questions that you may have. Thank you.
Okay. From what I can hear, we have no further questions. I'll thank you for joining us here today for us, very special days. Have a really nice day. I look forward to what will happen in the coming years or months for us because I think it's really transformative, this asset deal. Thank you. Bye.
This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a great day.