Ladies and gentlemen, welcome to the Cicor investor and analyst conference call and live webcast. I'm Carmen, the course 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 zero. 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 plc, a UK leader in advanced electronics for performance-critical applications. You will find our press release and today's slide on our investor relations website, and we'll be referring to the slides as we move through the call. We will begin by taking 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. Thank you for joining us on the call. We are truly excited to speak to you about our agreement with TT Electronics plc to create the largest global pure-play electronic manufacturing services provider in the high-mix, low-volume segment with strong focus in 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 Electronics plc 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, two-thirds and one-third cash stock.
Together, we will have pro forma revenue exceeding CHF 1.2 billion and an adjusted EBITDA of approximately CHF 140 million, including quantified run-rate cost synergies of at least GBP 13 million, which is equivalent to CHF 14 million, with one-off costs to achieve of approximately GBP 16.5 million, which is equivalent to around CHF 17.5 million. We see upside to this as well as potential additional revenue synergies as we continue to progress with the integration. This transaction is accretive 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 2.5 x 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 plc's largest holders, Everforce, who is holding 10% shares. Turning to slide four, let me walk you through the transaction structure in more detail. The headline price of GBP 1.55 per TT share, split between GBP 1.00 in cash and 0.0028 Cicor shares, is based on Cicor's closing price and exchange rate as of yesterday, implying GBP 0.55 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 Electronics plc has unanimously recommended the offer to their 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, United Kingdom. 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 UK, and Asia, offering power and connectivity solutions, manufacturing services, as well as specialist sensors that contribute below 25% of revenues.
Their customer base includes blue-chip names, and their global footprint spans eight sites in North America, eight in the UK, 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 the 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 in 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 in 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 base by the end of the third year post-completion. We see potential beyond this that, while not quantifiable under UK takeover rules, could provide material upside. The transaction boosts our EBITDA margin and is materially accretive to EPS. Finally, this transaction builds on our strong M&A track record and makes us a stronger platform for continued growth in the sector. We are highly experienced in acquiring and integrating businesses and will leverage our established and successful approach.
This also especially applies for selected TT sites, 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 and priority in 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 UK 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 players with global operations and capabilities, both in terms of revenue and EBITDA. Effectively, the combined group will become the largest listed European EMS player. Our combined revenue exceeds CHF 1.2 billion on an FY2024 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 UK, 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, but we'll 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 ten, 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-completing 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 consolidation and improvement of specific manufacturing sites, 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 take 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 of 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 large 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 x 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 a corresponding scheme document to be published as soon as practicable in November. As mentioned, the transaction is subject to merger control approvals in the UK, Germany, the U.S., Mexico, and Australia, as well as foreign investment approvals in the UK, France, Italy, and the U.S.
Cicor is experienced in engaging with regulators for approvals 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 segment, with expanded 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 are 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 their 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. Questioners 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. Once again, for any question, please press star and one. First question comes from the line of Mr. Geoffroy Le Guyader from Kepler Cheuvreux. Thank you.
Good morning. Thank you for taking my question and congratulations on the announcement of a deal. I just had a question relating to the timing of the acquisition. More specifically, if you can comment on eventually why you didn't look at TT back in 2024 when there were some offers on the table. Were you eventually considering an offer back then? If so, what stopped you to make this particular deal being announced today?
Thank you for that question. First of all, it is true that there is a long-term engagement between Cicor Technologies Ltd and TT Electronics plc for Project Albert, which we have closed only one and a half years ago. At Cicor, we are not happily engaging ourselves in competitive bid processes, but it is our principle to find agreement with the board of the company that we are interested in. That is how this has happened. We had a continued dialogue with the board and therefore came to the conclusion mutually that this is a highly valuable, accretive for both shareholder sets of TT Electronics plc and Cicor Technologies Ltd Generally, we are not very happy to engage in any kind of bidding process or the like. This is the explanation why we did not do this earlier.
Understood. Thank you very much. Are you able to tell, I see in the Rule 2.7 this morning that it said that Cicor had made several approaches before finding a definitive agreement. Are you able to tell whether TT was engaged in a sale process with other bidders other than yourself?
We can confirm that TT Electronics plc has not engaged in a sale process. This has been a process where we discussed together in the way that I have discussed. Why? Because the TT board, as well as we at Cicor , we see that both the strategic fit, if you look at geographies, if you look at markets, if you look at the type of business being in high-mix, low-volume, that this combination is rather unique and could not be done with, to the best of our knowledge and analysis, with peers of us in the market. That is also driving the very considerable amount of synergies of at least GBP 13 million, which also in our view would not have been possible with others. There is a very natural view from both companies that this is the combination that makes most sense.
The board of TT, to the best of our knowledge, was never inclined to start a sale or formal sale process.
Thank you very much.
You're welcome.
For any further questions, please press star and one on your telephone. Next question is from Thomas Blikstad from Pareto Securities. Please go ahead.
Hello, and congratulations on a very interesting announcement here. Very quick question on the pro forma figures and how, if you could break down the $140 million EBITDA pro forma 2026 with TT Electronics, given that your previous pro forma was $75 million in the higher range for Cicor only in 2026.
Yeah. Now, Peter, you want to take this?
Yes, I can. If you look at chart six, you see it very nicely. You see, and this is all based because we are under the UK takeover regulation, so we are always referring to 2024 actions. You see here in 2024, TT Electronics had GBP 54 million EBITDA. You see Cicor, including all the completed acquisitions and adjusting for the acquisition-related one-timers, we were at CHF 69 million. As Alexander said, on a going basis, we are expecting CHF 14 million of incremental EBITDA synergies. If you add this together, you get to the CHF 137 million that you see in this chart. That is when you round it in the CHF 140 million. Always keep in mind that we are referring here to the past actuals of 2024.
Okay, that's very clear. Thank you. Thank you very much.
You're welcome, Thomas.
The next question comes from Jolanda Stadelmann from Z Capital. Please go ahead.
Hi, can you hear me?
Yes.
Yeah. In the past, Cicor has emphasized that you're not looking for restructuring opportunities. TT Electronics had major problems with operational excellence in recent years, especially in the United States. Why do you believe you can manage TT Electronics more successfully?
First of all, thank you for your question. First of all, we don't see TT today in the state it is presenting itself today as a restructuring case. Why is that? Number one, they do have an issue at one specific site, a component manufacturing site in Plano, Texas. That contributed significant losses, and that TT, under the present management, has already resolved by closing down the site, which will mostly be done by the end of this year, before the completion of this transaction. That is one element. The other element is one site that TT had commented had operational issues. We have spent time at that site, and we found that with the knowledge we have, we are able to bring that site back into a profitable situation in a short period of time.
Let me tell you, this is the only site, really, that is creating the problem. We are talking about a business of 18 different sites, and after closure of Plano, one less, which will be completed before the completion of the transaction. All the other sites are contributing very nicely. Actually, I'm excited about the profitability potential of almost all of the sites that TT operates.
Thank you very much.
It's clearly not a restructuring case. What they had to do, they have already done successfully over the past few years. They have made adjustments. They have made adjustments in the operational footprint. They have made adjustments and written down goodwill from certain past acquisitions, which are years back, and they have addressed their operational issues very successfully. Moving forward, it's clearly not a restructuring case, but a successful company.
Thank you.
Next question comes from Paul Marriage from Premier Miton. Please go ahead.
Good morning. Very interesting webcast. Thank you. I'm a shareholder in TT. I have been for a long time. Can you just give shareholders in TT some sort of feel for what your operating metrics at Cicor are in terms of what levels of debt to EBITDA you're comfortable with, why you don't pay a dividend? Just maybe one or two things about the history there, and maybe also explain who your 40% shareholder is. That would be really helpful. Thank you.
All right. Let's start with our 40% shareholder, and then Peter can take over on operating metrics. One Equity Partners is a private equity firm, U.S.-based, money coming typically from U.S. pension funds and individuals. They are engaged with Cicor since 2021, when we defined the opportunity to consolidate, to be a consolidator, especially in the European EMS market. OEP is experienced in that role. They had similar engagements that were very successful for all the shareholders of these businesses, most notably a Norwegian software company called Creon. That is a good model for how OEP supports management to create value for shareholders. That's what they do. They are really a private equity that focused on transformational combinations and driving shareholder value out of these acquisitions. Peter, you may comment on some of our financial metrics.
Thanks a lot on this question. I would reference also our midterm goals where you see a little bit the measures that are really in focus for us. First, organic growth. We're targeting 7% to 10%. Over the past four years, we had been above 8%. You see where profitability, where EBITDA is very important as a measure for us, and where we guided a 10% to 13% range, a wide range, mainly because of exactly what we're doing, acquisitions. Last but not least, we like return on invested capital because it really drives the incentives and drives the team around the right metrics in terms of driving growth, profitability, and having the mindset of managing invested capital. That is in our business, a lot of networking capital and CapEx. Net debt, we want to remain below 2.75 in the 2028 horizon.
As you saw in the 2.7 announcement, we expect after the potential acquisition in 2026 to be at 2.5 leverage. Look, similar to TT, CapEx is not the most important driver in our business. We have a guidance of CapEx of 2.5% to 3%. That gives you a bit of a flavor on the key financial measures that we look at and obviously how we think about debt and leverage in terms of where we feel comfortable.
Thanks for that. I imply that you wouldn't be. You're not planning to ever distribute via dividends or not in the foreseeable future.
Look, at this point in time, you're seeing, if you look into our history, we are coming from a company above CHF 200 million. If you look now at the pro forma numbers as disclosed here in the 2.7 as well and in the presentation, we are at CHF 700 million. We have done a lot of growth, balanced organic and inorganic. While we are on this growth path, we continue to believe it's the best for the shareholders that we invest into the growth and continue along this path.
The reality is also that we have not excluded over the long term, medium-long term, to again paying dividends. As Peter said, we see a lot of value creation from the expansion of the business that we're doing now.
Thank you very much. The deal proves the illustration of how much more highly valued businesses like yours are in the Swiss market than they are in the UK market. Hopefully, you can take advantage of that.
Thank you.
Once again, to ask a question, please press star and one on your telephone. Star and one. Ladies and gentlemen, there are no more questions. I would like to turn the conference back over to Mr. Alexander Hagemann. Please go ahead.
Thank you all for your interest. Thanks for following us. Thanks for following this transaction. As I said, we are really excited about this acquisition. It is indeed the most important step forward towards realizing and actually exceeding our strategic objectives. We are the leader now in high-mix, low-volume electronic manufacturing globally for aerospace, defense, healthcare, technology, and industrial. What this provides is really also a new dimension in scalability of the company because now, together with the transaction we announced earlier this week, we have a square and strong footing in the U.S. market so that we are turning from a pan-European leader really into a global leader. Very exciting indeed. Now we have a process to go through. We have shown you the timeline, and we hope that we will be able to complete this transaction, as we said, in the first half of next year.
Thank you very much for your interest. Thank you for your continued support of Cicor, and we look forward to talking to you very soon in the near future. Thank you.
Ladies and gentlemen, the conference is now over. Thank you for choosing Cicor, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.