Sanitary technology solutions provider Geberit AG (GBERF.PK) Tuesday announced a tender offer to acquire Finland-based Sanitec, Europe's leading company in the area of bathroom ceramics, for 97 Swedish kronor per share, corresponding to a total value of 1.29 billion Swiss francs or $1.35 billion. Sanitec's shares surged over 51 percent on the news.
The offer represents a premium of 29 percent, compared to the volume weighted average trading price of the Sanitec shares on the Stockholm Stock Exchange over the past three months.
The merger is being financed by Geberit using its own funds, as well as by new debt.
The offer is subject to customary conditions, including an acceptance rate in excess of 90 percent of the shares and clearance from relevant merger control authorities.
The acceptance period for the offer is expected to begin on November 17, and expire on December 22.
Sanitec had net sales of 702 million euros in 2013 with an operating profit margin of 9.7 percent. It has 6,200 employees worldwide, 18 production facilities and 24 sales units in Europe.
Geberit said the new company would be a unique integrated company in the sanitary products market in Europe. The future product offerings will be enhanced with bathroom ceramics.
According to a pro forma calculation based on 2013 figures and not considering the merits of the combination, the combined company generated net sales of roughly 2.9 billion francs with an operating profit of just under 600 million francs, corresponding to an EBIT margin of about 21 percent.
Net income was just below 500 million francs, which corresponds to a return on sales of around 17 percent.
The two largest shareholders of Sanitec, EQT and Zeres Capital, jointly holding 25.5 percent of the Sanitec shares, have given irrevocable undertakings to accept the offer for all of their shares.
Geberit added 0.8 percent in Zurich to 292.00 francs.
Sanitec, which trades in Stockholm, surged 51.4 percent to 95.00 kronor.
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