Today, Hanza announced the acquisition of Swedish Orbit One, a contract manufacturer in electronics and electromechanics. The company operates in two manufacturing facilities in Sweden and one in Poland, with about 620 employees, including approximately 65 engineers.

Orbit One is expected to generate SEK1.1bn in sales and an EBITA of SEK70m in 2023, corresponding to an EBITA margin of 6.4% – below Hanza’s R12m of about 8%. The purchase price for the shares depends on the financial statements for November 2023 and is estimated to be SEK367m. In addition, there is an earn-out of up to SEK91m based on the company’s performance in 2024. The earn-out is only due if earnings improve compared to 2023. Excluding earn-out, Hanza pays 5.2x EBITA, which we consider an attractive valuation multiple for a large acquisition like Orbit One. Given that the maximum earn-out is paid out, the total purchase price corresponds to a maximum of 7x EBIT – which we believe is fair for a company of this size given an improving earnings trend. The completion of the transaction depends upon obtaining regulatory approvals, anticipated to be secured no later than early January 2024.