Ladies and gentlemen, welcome to the Cicor Media Conference Call and Live Webcast. I'm [Carmen] the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press Star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Peter Neumann, CFO. Please go ahead, gentlemen.
Thank you, and good morning to all joining us. With me today is Alexander Hagemann, our CEO. Earlier this morning, we announced that we have agreed to acquire TT Electronics, a U.K. leader in advanced electronics for performance-critical applications. You will find our press release and today's slides on our investor relations website, and we'll be referring to these slides as we move through the transaction.
We'll begin by talking you through the terms of the transaction and, importantly, the strategic rationale. We will then open up for questions. Please note today's call will include forward-looking statements. Actual results may differ. For full details, please see our press release and the appendix of this presentation. With that, I will hand over to Alexander to walk us through the transaction.
Thanks, Peter. Good morning, everyone, and thank you for joining us on the call. We are truly excited to speak to you about our agreement with TT to create the largest global pure-play EMS provider in the high-mix, low-volume segment with strong focus on Healthcare Technology, Aerospace Defense, and Industrial Automation.
Let me start with a brief overview of the headline terms and financial effects. We have agreed to acquire TT for an equity value of CHF 303 million, which translates to an enterprise value of CHF 396 million. The offer is structured as GBP 1.55 per TT share, GBP 1.00 in cash, and GBP 0.55 in Cicor shares, 2/3 and 1/3 cash stock.
Together, we will have pro forma revenue exceeding 1.2 billion CHF and adjusted EBITDA of approximately 140 million CHF, including quantified run-rate cost synergies of at least 13 million GBP, which is equivalent to 14 million CHF, with one-off costs to achieve of approximately 16.5 million GBP, equivalent to about 17.5 million CHF. Sorry, 16.5 million British pounds, equivalent to 17.5 million CHF.
We see upside to this as well as potential additional revenue synergies as we continue to progress with the integration. This transaction is equated to our EBITDA margin and expected to deliver more than 30% EPS accretion in financial year 2028. We are targeting pro- forma net leverage to be around 2.5 by the end of 2026, supported by strong cash flow generation of the combined business.
We anticipate closing in the first half of 2026, subject to shareholder and regulatory approvals. We have already received a letter of intent to vote in favor of the transaction from one of TT Electronics' largest holders, Aberforth, who is holding 10% shares. Turning to Slide 4, let me walk you through the transaction structure in more detail. The headline price of 155 pence per TT share, split between 100 pence in cash and 0.0028 Cicor shares, is based on Cicor's closing price and Forex as of yesterday implying 55 pence in value.
This represents a premium of 64% to TT's spot price, 53% to three-month VWAP, and 113% to the TT share price six months prior. The board of TT has unanimously recommended the offer to the shareholders. TT shareholders will hold about 10% of the enlarged group, with Cicor current holders retaining the remaining 90%.
OEP will remain the largest shareholder of the combined group, with roughly 38%. They are equally as excited about the potential value creation for shareholders of the enlarged Cicor group and remain committed to helping us achieve our ambitions. Completion is subject to TT shareholder approval, 50% by number, 75% by value of those voting, and regulatory sign-off in several jurisdictions. Cicor shareholder approval is not required. Turning to slide five, I'd like to give you a brief overview of TT.
TT was incorporated in 1908 and is headquartered in Woking in the U.K. The company specializes in advanced electronics for demanding applications with a focus on healthcare, aerospace and defense, and automation and electrification. TT operates across North America, the U.K., and Asia, offering power and connectivity solutions, manufacturing services, and specialist sensors that contribute below 25% of revenues.
Their customer base includes blue-chip names, and the global footprint spans eight sites in North America, eight in the U.K., and three in Asia. For 2024, TT generated CHF 550 million in revenue and CHF 54 million in adjusted EBITDA, according to IFRS. Given all of this, we believe TT has a highly complementary business model and strong strategic fit with Cicor. Turning to slide six, you will see why this is a transformational acquisition for us.
First, by combining our strengths, we are creating a global EMS leader with expanded technical and manufacturing capabilities. The combined group will be the largest global pure-play EMS provider in the high-mix, low-volume business, with strong focus on healthcare technology, aerospace and defense, and industrial automation, with revenue doubling to over CHF 1.2 billion and with sector-leading EBITDA margins.
Second, the deal creates an agile and competitive platform that will accelerate organic growth. Cicor will be better able to pursue its global ambitions, especially North America. The deal also presents significant cross-selling potential and deeper reach in key markets such as healthcare technology or aerospace and defense. Third, the transaction significantly enhances our financial profile with exciting synergy potential. We have quantified at least GBP 13 million of synergies on an annual run-rate basis by the end of the third year post-completion.
We see potential beyond this that, while not quantifiable under U.K. takeover rules, could provide material upside. The transaction boosts our EBITDA margin and is materially accretive to earnings per share. Finally, this transaction builds on our strong M&A track record and makes us a stronger platform for continued market growth in the sector.
We are highly experienced in acquiring and integrating businesses and will leverage our established and successful approach. This also specifically applies for selected TT-sites known under Project Albert, which we will further elaborate in the presentation. Turning to slide seven, let's talk about the strategic fit. This combination significantly strengthens our capabilities in engineered electronics and high-specification components.
We will maintain our focus on priority end markets of industrial automation, healthcare, and aerospace and defense. Our footprint will be broader than ever across Europe, the Americas, and Asia, with a larger presence in the U.K. and new reach in North America. We see a real opportunity in the U.S. where we can leverage TT's manufacturing and Cicor's expertise to drive growth. Our North American presence will also be strengthened by the acquisition of two sites from Valtronic, which we announced earlier this week.
The Valtronic sites are highly complementary with TT's business and should provide additional synergy upside, especially given the geographic proximity. Turning to slide eight, this page highlights how the enlarged group will become one of the largest listed European EMS player with global operations and capabilities, both in terms of revenue and EBITDA. Our combined revenue exceeds 1.2 billion CHF on a financial year 2024 basis, putting us at the top of the peer group.
Our EBITDA and margin are expected to be sector-leading as well, thanks to our specialization on high-mix, low-volume manufacturing for highly demanding applications, our operational excellence, and the cost synergies we have identified. Turning to slide nine, we showcase our combined global manufacturing footprint. The map illustrates the addition of sites in new geographies, including North America, the U.K., and Asia.
This further diversified footprint enables us to serve customers more globally, optimize our supply chain, and respond quickly to new market opportunities. In particular, this unlocks a significant opportunity for us in the U.S. to leverage TT's manufacturing sites and Cicor's operational expertise to accelerate revenue growth in North America.
You will see we have also shown here the location of the Valtronic sites in relation to TT's operations. At this point in time, we have not decided on any actions to consolidate the operating footprint that will strive to determine the best global setup moving forward. Both companies have undertaken independently such optimization measures as TT's closure of Plano and Cicor's closure of Ulm. Turning to Slide 10.
As previously mentioned, we have quantified run-rate cost synergies of at least GBP 13 million, equivalent to CHF 14 million, on an annual run-rate basis by the end of the third year post-completion of the transaction. 95% of these synergies will be delivered within the first two years. We have a very high degree of confidence in delivering these synergies as they come from identifiable cost savings and have been heavily verified by a public reporting accountant. 85% will come from overlapping roles across head offices and senior management functions, as well as duplicate public company costs.
The remaining amount comes from overlapping roles outside of head office, where Cicor intends to apply its decentralized approach to drive efficiencies. Beyond this quantified amount, we see significant potential additional synergies through the consolidation and improvement of specific manufacturing sites processed, which could provide additional cost synergies and cross-selling opportunities across the enlarged customer base, providing revenue synergies.
There will be one-off integration costs, mainly for workforce and site changes, but we will manage these carefully to ensure a smooth transition. Turning to Slide 11. Over the past several years, we have completed a series of strategic acquisitions across Europe and beyond in order to complement our existing strengths and expand our capabilities. These have notably allowed us to further strengthen our leadership position in aerospace and defense.
This proven playbook gives us confidence in our ability to successfully integrate TT and continue delivering value for our shareholders. What also increases our confidence in being able to execute this deal smoothly and drive shareholder value is our familiarity with TT's business. Just last year, we acquired three sites from TT and have been very pleased with how the integration has progressed. Let me talk you through it in more detail now. After acquiring three TT sites in March 2024, we applied the Cicor business model and integration playbook with great success.
That is to decentralize support functions and decision-making wherever possible and to minimize central SG&A spending. There has been a step change in profitability and free cash flow generation at these sites, creating significant shareholder value. Most of the acquisition cash outlay was rapidly recovered, with EBITDA more than doubling at the acquired sites. This experience also confirmed the strong cultural and business fit between TT and Cicor, which gives us confidence that applying the same integration approach at a larger scale will unlock further value at scale. Turning to Slide 13.
When managing our integration, the focus will be on delivering cost synergies, retaining the best talent, and ensuring a best-in-class experience for our customers, partners, and stakeholders. Within the first six months post-completion, we will conduct a strategic review to finalize and refine our integration plans. We will continue to look for additional synergy opportunities and work to improve TT's performance within the group.
Certain TT sites relating to their components' business will be managed separately as non-core assets in line with TT management's current plans. While these are good businesses operating in attractive end markets, they are not synergistic with the wider group. Therefore, we will conduct a review to determine whether Cicor is the best owner for these assets and what will drive maximum shareholder value for the enlarged group. We will keep the market updated as we hit integration milestones and track our financial progress.
Our team has a strong integration track record, and we are confident we will deliver on these objectives. Turning to Slide 14. This transaction is fully aligned with Cicor's strategy 2028 to be the leading pure-play pan-European electronics partner. The enlarged group will have more cross-selling opportunities, broader capabilities, and a focus on high-growth sectors.
We will integrate TT's operations using our experience in acquiring and integrating companies to deliver value. We will maintain a solid balance sheet, aiming for pro forma net leverage to be around 2.5 by the end of 2026. Turning to Slide 15, here's our timeline to completion. The TT shareholder vote is expected to take place in December, with the corresponding scheme documents to be published as soon as practicable in November.
As mentioned, the transaction is subject to merger control approvals in the U.K., Germany, the U.S., Mexico, and Australia, as well as foreign investment approvals in the U.K., France, Italy, and the U.S. Cicor has experience in engaging with regulators for approval given our M&A track record, and we have a high degree of confidence in being able to successfully complete these processes. On this basis, we expect closing to take place in the first half of 2026. Turning to Slide 16, I'd like to reiterate how excited we are about this acquisition.
This transaction creates the largest global pure-play EMS provider in the high-mix, low-volume business, with its standard technical and manufacturing capabilities. It enhances our financial profile and offers significant value creation for shareholders. It builds on our proven playbook of creating value by consolidating the fragmented EMS market and will allow us to continue to do so. This deal is fully aligned with our strategic roadmap and positions us for long-term success. With that, we're happy to take your questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Mr. Rolf Arpagaus from AWP. Please go ahead.
Good morning, gentlemen. Thank you for taking my question. First, I wanted to ask you, would you like questions in English or German? Also be fine? I don't know who's all on the line. Is everybody on the call?
If English works for you, but we can also do it in German, yes.
Yeah, English works. English works. First thing I thought this morning as I saw this huge company you're buying, I thought, wow, that's pretty cheap. When my first thought, second thought was, is TT a restructuring case? Because they had turnover going down last year. They had problems in North America because of taxes and other operational problems. Can you maybe comment on that?
Taking your questions one by one, we find that the valuation and the offered price is both offering value to TT's shareholder by offering a material premium of 64% to yesterday's close. Whereas at the same time, it is truly value creative for Cicor shareholders with the anticipated EPS accretion of more than 30%, of which, as we said, a good portion will already happen earlier.
So the common view of the boards and management of both companies, TT and Cicor, is that this is a win-win creating value for both sets of shareholders. Now, about the situation of TT, I have to say, and that is what was stated also by Warren Tucker in the 2.7 Announcement, is that TT was set up to be a much larger company. They have set up a headquarters of scale, which would support a significantly larger company, but for a variety of reasons that did not happen. TT is clearly not a restructuring case, as you see in the underlying profitability already that TT has standalone.
Yes, there have been some revenue, the revenue coming back recently as the result, especially of inventory cycles in the component business. So this is not a concern to us, as we have done really a deep dive into TT, into the markets, into the sites, and honestly, what we see is that TT's management and board have done an excellent job under present leadership to address all the critical topics of the company.
Okay, but still going back to, you're not going to integrate TT, Delfil, as they're standing here. As I got the presentation, it was pretty fast. You were talking about some sites in Great Britain you're going to close. Can you go a little bit more in depth? W hat does that mean for your sites in the UK, in Switzerland? And how many employees do Cicor and TT have today? H ow much will they have, will the company have together after integration in three years?
Cicor today has roughly 4,400 employees, and TT Electronics almost 4,000. So together, it's above 8,000. We have announced that there will be certain headcount reductions according to the measures that I have outlined in the presentation that are less than 5% of the TT Electronics headcount. A s we mentioned, the cost savings will be focused on corporate SG&A by applying the Cicor lean operating model.
As part of this, we are not anticipating site closures. This is not part of the plan that is announced today. What I have mentioned is that independently, TT is in the process of closing an unprofitable site, which is in Plano, Texas, manufacturing components. Whereas we at Cicor have closed our thin film site in Ulm and transferred production to our Swiss site in Zug.
No facility closures foreseen as part of this plan and proposal. So also your question, how will this affect Cicor sites? We do not foresee at this point in time any effect on Cicor sites with regards to headcount. So nothing of any significance. We will be very focused in developing the cross-selling opportunities that we have.
Okay. Then I have to also dive into one thing you said about the integration. I didn't get that all completely. You said after six months, you will do a new review and decide if one certain part will also belong in the future to Cicor. T hen I didn't get that, what we were talking about.
Out of the roughly 18 sites of TT, and that is also in the 2.7 Announcement, there are around 10 sites that are very synergistic with Cicor's business. These sites represent the vast majority of revenue of TT Electronics. So this is really the dominant part. T hese sites will integrate according to the playbook like we have done with the three sites in Project Albert one and a half years ago. Now it is just 10 sites.
There are remaining roughly seven sites after the closure of Plano that are operating in businesses that are not synergistic with the other 10 TT sites or the other Cicor sites. H ere we will continue to manage these businesses separated from the core business and identify for which sites Cicor would be the best owner or if there would be another owner that could develop the potential of these sites better.
Okay, then I got it right now. As we stay in the line, I got two more. You recently said, you said the cash parts of this takeover price of GBP 303 million is about two-thirds, so 200 million. So I think that the bridge loan will be about CHF 100 million because at the investor conference, you recently said for takeovers, you had about CHF 100 million on hand. Is that correct? OEP will come in front.
Yes, we've established them, but what we have done because of the UK rules, we have established the bridge financing that is significantly higher. It covers the full cash portion. H ence, we have the competitive financing in place. It is debt financing facility together with UBS and Commerzbank, which covers more than the cash portion and obviously the consideration to the TT shareholders under the terms of the offer.
We are using this to fulfill our requirements to prove the financial capacity to do the transaction. The entire bridge financing is, as stated in the 2.7 Announcement, GBP 335 million. Then that bridge, because it has to not only cover the cash portion of the purchase price, but also it has to provide security to allow to cover all existing debts of TT Electronics.
Okay. Did you at any point of your presentation mention restructuring costs? You have a lot about synergies, but restructuring costs, can you give me a heads-up?
Yes, we have mentioned the restructuring cost of about GBP 15.5 million, and that is the overall integration cost. That integration cost includes all aspects. It includes restructuring where needed, so payments for positions that are eliminated in the combined group, but it also includes all other elements such as IT integration, which obviously will be a very important portion of the overall.
Okay. Then I know I'm pretty long in the line, but one last one I got. Your midterm target was telling us that you're going to have one billion turnover till 2028, so one big leap and you're over it. When we're going to hear your new midterm targets and if you already gave an indication where you could go for?
What we can already say is that there is no reason that we see today to change our midterm targets if it comes to revenue growth, to operating margins, to level of net debt, or CapEx. On revenue targets, we will in due course publish a new target, but this is too early for me now to give you a response when exactly we will do this.
Okay, thank you very much. For me, I'm through now. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Ladies and gentlemen, there are no more questions. I would like to turn the conference back over to Mr. Alexander Hagemann for any closing remark.
Thank you very much for your interest. This is an exciting day. Coming together between TT Electronics under the roof of Cicor is an opportunity that, in our view, really knows no losers. As we said, it is, in our view, and the view of the board of TT Electronics, highly attractive for TT shareholders. It is highly EPS accretive for Cicor shareholders. It enlarges the regional footprint scale and also offerings for our customer base.
O bviously, it increases opportunities for our employees and managers. So we are very excited about this opportunity. Now, obviously, we go through the process as it is outlined. In the meantime, we are here to respond to your questions, obviously, also after this call. W e are very grateful for your interest in this transaction. Thank you very much and have a great day.
Ladies and gentlemen, the conference is now over.