News Release
<< Back
Snap-on Incorporated to Acquire Sandvik Saws and Tools for Approximately US $400 Million in Cash
Sandvik Saws and Tools, based in Sandviken, Sweden is one of the world’s largest manufacturers and suppliers of professional hand tool products. The company has 12 manufacturing facilities in eight countries. Snap-on will acquire a royalty-free license that permits it to use Sandvik’s trademark for saws on a worldwide basis for a period of three years and for all other products for a period of two years. Snap-on expects that a combined Snap-on/Sandvik hand tool company would have pro forma 1998 annual sales of approximately US $2.1 billion (SEK 16.7 billion).
“This transaction is part of our strategy to be a key player in the globalization of the hand tool market,” said Robert A. Cornog, Snap-on Incorporated chairman, president and chief executive officer. “Together, we will have a solid platform for growth on three continents and significant operations in Asia. This transaction solidly positions us in the European tool market and gives Snap-on a major presence in the developing South American market. Furthermore, the Sandvik hand tool product lines allow Snap-on to extend its brand presence to new channels in the North American marketplace.
“Sandvik and Snap-on share a common focus on serving the professional segment of the industry with innovative, performance-oriented products. The Sandvik hand tool group is an industry leader in research and development, distribution and ergonomic design — we are committed to continuing that strong heritage,” continued Mr. Cornog.
“We respect Sandvik hand tool group’s employees and their commitment to excellence. This well-managed company has a highly talented management team, access to attractive distribution channels and a complementary portfolio of high-quality products. All of this fits tightly with our global growth strategy. We look forward to working with the Sandvik team to realize the opportunities this transaction creates,” Mr. Cornog concluded.
Clas Åke Hedström, chief executive officer and president of Sandvik AB, said, “A comprehensive change in structure is required in order to develop the operations within Sandvik Saws and Tools long term and to achieve global leadership. Most of all, this requires a substantially greater sales volume which is not possible with our own organic growth but requires a merger with another company.
“Accordingly, the sale of Saws and Tools to Snap-on is a logical and favorable transaction for both companies worldwide. Snap-on, which is a well-established company with quality products and services, and with a strong reputation in the industry, will offer highly favorable opportunities for Saws and Tools’ continued development,” Mr. Hedström continued.
“As a result of the sale, Sandvik’s operations are concentrated to our three core areas: Tooling, Mining and Construction, and Specialty Steels, where the technology content is large and where we are world leaders in selected niches. We assess that we can best apply our R&D competence, among other assets, through investing our resources for expansion within these areas,” Mr. Hedström added.
Göran Gezelius, president of Sandvik Saws and Tools, said, “I am excited about the opportunities this transaction presents. Together with Snap-on, we will offer customers a full range of high-quality professional tools and equipment by building upon the combined company’s strong brands and long-standing distribution relationships. We will provide superior products, services and value to our customers. I am confident our customers and employees will be delighted with this combination.”
Snap-on noted that this combination is about growth, not cost-cutting. Snap-on anticipates revenue enhancements resulting from, among other things, utilizing Sandvik Saws and Tools’ efficient distribution networks, logistics capabilities and extensive sales and marketing support; growing its strong distributor relationships; expanded growth opportunities for Snap-on’s and Sandvik Saws and Tools’ products across complementary distribution channels, including the North American market; and exploiting the combined company’s enhanced European presence.
Completion of the transaction is subject to Sandvik AB shareholder approval, customary conditions and receipt of necessary governmental approvals in the United States and Europe. Snap-on intends to finance the acquisition through existing credit facilities. The companies anticipate that the merger will close in the beginning of the third quarter of 1999.
Sandvik Saws and Tools develops, manufactures and markets handheld tools for professional users with sales of SEK 2,694 million in 1998. The Business Area employs approximately 2,700 people. Of those, approximately 1,000 employees are in Sweden. Products are manufactured at 12 plants in Sweden, Germany, Portugal, France, England, the United States and Argentina.
Merrill Lynch & Co. acted as financial advisor to Snap-on Incorporated. Lehman Brothers Inc. acted as financial advisor to Sandvik AB.
Sandvik AB, headquartered in Sandviken, Sweden, is one of Sweden’s largest export companies, with worldwide business activities conducted through 300 companies and representation in 130 countries. The Company has 37,500 employees and annual sales of SEK 42.4 billion (US $5.09 billion). Sandvik AB consists of six separate business areas responsible for research and development, production and sales of their respective products. These business areas include: Sandvik Tooling, Sandvik Mining and Construction, Sandvik Specialty Steels, Sandvik Hard Materials, Sandvik Process Systems, and Sandvik Saws and Tools.
Snap-on Incorporated is a US $1.8 billion leading global developer, manufacturer, and distributor of tool and equipment solutions for professional technicians, motor service shop owners, specialty repair centers, original equipment manufacturers, and industrial tool users worldwide. Product lines include hand and power tools, diagnostics and shop equipment, tool storage products, diagnostics software, and other solutions for the automotive service industry. Snap-on employs approximately 12,000 worldwide.
Statements in this release that are not historical facts, including statements (i) that include the words “believes,” “expects,” “anticipates,” or “estimates” or words of similar importance with reference to the Corporation or management; (ii) specifically identified as forward-looking; or (iii) describing the Corporation’s or management’s future plans, objectives or goals, are forward-looking statements. The Corporation or its representatives may also make similar forward-looking statements from time to time orally or in writing. The Corporation cautions the reader that these statements are subject to risks, uncertainties or other factors that could cause (and in some cases have caused) actual results to differ materially from those described in any such statement. These important factors include risks associated with closing of the transaction, which could include failure to receive applicable approvals and the Corporation’s ability to integrate the acquisition. The pro forma performance stated in the release is subject to risks, including, but not limited to, final costs associated with financing. Other factors include the Corporation’s ability to withstand external negative factors including changes in trade, monetary and fiscal policies, laws and regulations, or other activities of governments or their agencies; significant changes in the current competitive environment; inflation; currency fluctuations or the material worsening of the economic and political situation in Asia or other parts of the world.
These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Corporation operates in a continually changing business environment and new factors emerge from time to time. The Corporation cannot predict such factors nor can it assess the impact, if any, of such factors on the Corporation or its results. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Corporation disclaims any responsibility to update any forward-looking statement provided in this release.
Media contact:
Richard Secor
414/656-5561