Good morning, and thank you for joining this call at short notice. I'm Erik Stenfors, and it will be my pleasure to present to you a great acquisition that we did just this morning. It's a deal that will create significant value for our customers, and therefore, of course, also for the shareholders. I will run this presentation together with my dear colleague, Lars Åkerblom, our CFO. We will start with a brief recap of HANZA and our strategy. It's important in order to put this acquisition into perspective. Then we will talk about the company in question and the rationale behind the acquisition. Next, I leave the floor to Lars to talk about the details of the transaction and the impact, financial impact.
Then we end the presentation with a deal summary and a look at the future, and we end the call with a Q&A session. Please use this opportunity to ask any questions. First is HANZA. Started back in 2008, we were armed only with a vision to try to create some new value in a rather old industry, contract manufacturing. Now we turn 15, and we are about 2,200 colleagues distributed, as you see in the map to the right. Sales has passed SEK 4 billion, and now, of course, we're talking before the acquisition. Then is the question: how did we then turn this vision into such a rapid growth? Well, our focus has been customer value, and traditional contract manufacturing provides rather low value. You order a part, and you get that produced.
We are embracing several technologies, so we can do different parts in a product. We can also do the part assembly, so we can deliver ready products. We do that in the industrial parks, which we call manufacturing clusters, and these were the ones you saw on the previous slide. In addition, we have also created advisory services, so we help our customers with the help, how to streamline, how to optimize the supply chain, and also how to execute this change. On top of that, we have product development. We are a pure contract manufacturer. We don't have any own products, that's important, but we do have an R&D department, and the idea is to support our customers' R&D department.
It is this business model that led to a very solid customer base, that in turn led to that we have been the fastest-growing company since we started. Again, these are numbers before the acquisition. What is also important to know, to in order to understand this acquisition, it is that we have built HANZA step by step with defined milestones. We can actually grow HANZA in three dimensions. We can increase the scope, manufacturing technologies and services. We can increase geography. We can add new places in the world where we put down the HANZA flag, and we can increase capacity. We have said the phase we are in right now, what we call Strategy HANZA 2025, we're going to grow on existing geographies, existing technologies.
And this focus is what led to today's deal, and now let's have a look at the acquisition. Orbit One. I would clearly rank this as one of the best EMS companies in the Nordic region. They have won lean awards. They have been profitable, have a very strong track record, populated by a good CEO, good managers, good skill. Highly robotized, automized company. Sales, about SEK 1.1 billion, operating profit, SEK 70 million. Lars will come back to this. They run three manufacturing units, two in Sweden and one in Poland. In total, about 620 new colleagues to HANZA. What is important is that they are quite similar to HANZA. They have run the different sites independently, the same as HANZA do. We have a decentralized organization with site manager that goes together into our clusters.
And also similarities with the customer base. They have a diverse, diversified customer base, divided into segments and customers, different customers in these segments. And this is, this is important information because it, it means that it fits our acquisition parameters. So for us, it's important with the customer base that it's strong, it's diversified. There is no overlap, so the potential for, for cross-selling is, is good. So the sales side is a tick in the box, and then you have the operation side. So this will heavily strengthen our group competence in, in electronics. Electronics is the smaller part, has been the smaller part of HANZA, around 40%. And what is also important, I, I understand that we are a bit unique in this. We do an HR due diligence, so that's the first thing we do. That's when we check the culture.
Make sure that it is a decentralized organization. And this is the base for any acquisition, and that's why we call ourselves we are a serial acquirer, but in slow motion. It has to fit our parameters. But a very good customer base, really good management, good CEO, good culture, existing technology, existing geography, as it should be in our strategy, and good financials. Now, this is good already at the start, but it will be even better. What we will do is that we will split the company and put one part in the Swedish cluster and one part in the Central Europe cluster.
We know when you have heard before that we did an acquisition, the previous one was in Mönchengladbach, the company with red figures, that we turned to black figures that companies inside our cluster model normally becomes even better. So now we will have a one-year integration period, and what happens is that even this is a good company from start, HANZA 2025 will become at a whole new level, thanks to this acquisition. But, I will come back to that, and this was just a short part about the operational synergies, and, Lars will talk about the financial synergies. But before that, let's have a look at the transaction details, Lars.
Thank you, Eric, and I will start with describing the transaction and then come into the financial impact. As Eric mentioned, we signed this deal this morning, and the purchase price is preliminary set to SEK 367 million for 100% of the shares in Orbit One, including the subsidiary in Poland. It will be adjusted when we have the financial figures for end of November, so it can change slightly. In addition to that, there is additional purchase price, however, that additional purchase price will only come into payment if Orbit One increases the profitability and develops in a good way in 2024, and the maximum earn-out will can be SEK 91 million.
Given that we paid, the full earn-out is an enterprise value of 7x the EBIT or 0.4 in price for the sales, which is lower than the valuation we have in HANZA. We will finance this acquisition fully by bank credits, and there are no outstanding financial conditions for this acquisition, so it's fully financed and ready to close. We need some regulatory approvals in order to close the deals, and we expect to get them and be able to close the deal not later than in January 2024. The CEO of Orbit One, Mattias Lindhe, he has decided or said that he will reinvest SEK 2 million of what he gets for his shares.
He's part owner of Orbit One in HANZA shares, and he has signed a lockup agreement on these shares for 12 months. Coming into the financial impact, you can see down to the right in the table and the graphs, the increase that HANZA have had, and you know that HANZA has been growing quite rapidly, and are now rolling twelve on a little bit over 4 billion SEK. And if we just add the sales in Orbit One, we will be on SEK 5.2 billion. And for the ones who know HANZA, you know that that's also above the financial goal we have for 2025 of SEK 5 billion. And Orbit One has an operating margin that is a little bit lower than what we have rolling twelve in HANZA.
They, they are on 7.7, or they are a little bit lower than, than 7.7. But if we add the two companies together, we will be on 7.7. So a little bit lower than HANZA is, is on rolling twelve, but as Erik said, this is the start, and, and we have a strong P&L as a start, and we expect the combined company to increase the profitability. But what's also good is that this acquisition will contribute and increase the earnings per share already from the start. Looking into the balance sheet and the net debt, this acquisition will lead to, of course, an increase of the net debt and an increase of the net debt compared to the EBITDA, but we will still be well below our financial target of 2.5.
And we also expect that we bring this company in, and we can get a positive cash flow going back in history. We can. We know that we have been good in integrating companies and free up working capital and have a positive cash flow, and we expect to be able to do this also with this acquisition. We also see that, with the fine company that we get, with the good machinery park, we will be able to reduce the CapEx in 2024 compared to what we had otherwise planned. Also, the fact, and we have said this also, that we want the clusters to be on a 1 billion SEK level, 100 million EUR levels.
By adding this operation into the Central Europe cluster, we will increase the size of the cluster in Central Europe and expect that to have a positive impact on the profitability as well. There'll be an integration period of over a year or so, and then we expect, as Erik also mentioned, that after the integration period, that we will be able to increase the profitability in Orbit One quite significantly. By that, I leave back to you, Erik, and to summarize the acquisition.
Thank you, Lars. So let's end with some conclusions, the main takeaways from this acquisition. First of all, it's a high-quality company, a really strong company in electronics, with a solid customer base and solid earnings. Secondly, this is an acquisition that fits perfectly with the HANZA 2025 strategy. And thirdly, we will have both operational and financial synergies from start. HANZA just got a little bit better, but now we commence the integration period, and we expect a good development and that 2025, when we have done all this, will be truly great. And that's why this is a really good acquisition, and it's also why our board of directors has decided to revise our financial targets. So that's something that we will come back with in the beginning of next year. And by that, we are happy to take your questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Fredrik Nilsson from Redeye. Please go ahead.
Thank you. Hi. First, I'm interested in some rough number about the sales split between Sweden and Poland.
Hi, Fredrik. We have not revealed that, but as you saw from my slide earlier on, there is about 50/50 split in people between Sweden and Poland, so maybe that's some guidance.
I see. Thanks. And also, I mean, it's strengthening your Swedish cluster, as you pointed out. However, it's quite far between Ronneby and your facilities in Värmland. Are there any of the typical synergies that you won't be able to achieve due to the distance, or how should we look at that?
No, no. There, there is no need for proximity when it comes to synergies. And, even though the distance maybe is 150 km or something from Markaryd, what we do is that we combine different functions and different costs in our clusters, and we do it by more or less by language or geography, so that's why we call it cluster. But the impact will be the same, and it's also the same for Poland, even though it's also 450 km between Prabuty and Brzeg Dolny.
Okay, I see. And looking at the numbers that I have access to, it seems that you expect revenues to decline with about 9% this year in Orbit One compared to last year. Is that right? And if so, what's driving that?
This is a company, I cannot comment on that, but I can tell you that this is a company growing, and that's why, as Lars stated, we have made an earn-out based on that it will be a better 2024 than 2023. So it's only earn-out if next year becomes better than this year, which is clear indication that this is a company growing and, and doing rather well.
Okay, I see. And last question from me. I mean, obviously, you expect to improve its margins over time, but you also mentioned a one-year integration. Should we expect that to hit margins slightly short term or rather expect flat margins?
So, I'm not sure I caught the question, but it is a healthy company from start, but we will make it even more profitable, and we will also do cross sales. So of course, there will be some integration costs, but we have been quite good in keeping those down, so we don't expect any major one-time costs connected to this.
You know what? You know what? You know, Fredrik, I need to mention something. We have the same ERP system.
Ah, okay, I see. So it should be smoother than usual then, I suppose.
How about that? Now, that's really, really something that takes some time during the integration.
I see. Okay, that's, that's all from me. Thank you very much.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Tommi Saarinen from Inderes. Please go ahead.
Hi, guys, and thank you for the presentation. Just to dive a bit more into the integration and the synergies you expect to improve Orbit One's performance by quite a lot. So what are the kind of functions where the synergies are you expect to realize, and what are the kind of main actions you're planning to take? Thanks.
Should I start with this, Lars, or?
You can go ahead. Go ahead.
Okay. So, thanks for the question. So first of all, on the sales side, we see that comes in a customer base, which has been using a traditional contract manufacturer, even though it's a first-class one. Of course, there are a number of things that we can offer in our concept, so we do expect sales synergies. On the cost side, we have our Close Cluster concept, which means that we put together both the capacity and the functions, and we have shared service center. I think Lars can elaborate on that. And it means that all that drives increased margin, and that's why. To put it like this, it doesn't make any sense to combine one electronics factory with another, but combining electronics with mechanics makes perfect sense.
That's when you bring up the margin, and that's why we've been able to run a margin which is higher than traditional contract manufacturers. And this concept, we are proud to say that each and every company we have acquired, doesn't matter if it's been a turnaround company or if it's been a highly profitable company, has increased sales and earnings inside HANZA. So we see it works really well, and the last example of this, latest example of that was, as I said, the acquisition in Mönchengladbach. Lars, would you like to add something to this?
Yeah, the cluster concept also includes shared service center and this type of arrangement. And what we have seen is that we, with that concept, we can be more cost processes and administration and lower the cost. So we expect that to also contribute to on the cost side for synergies.
All right, thanks. Then, to me, it seems that only the sales financial target regarding the sales is kind of the only one that needs to be reconsidered. Do you plan to make any other significant changes to the financial targets? I don't know if you can comment any on that.
No, we cannot comment on that, but yeah, we cannot comment on that. That's the answer.
All right, thanks. That's all for me.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay, thank you. It's the first of December today, and we are happy to be the company opening the first door of the advent calendar. Thank you all for joining. I really hope that you will have as great a day as we are having here at HANZA. Thank you so much, and goodbye.