Hexagon acquires engineering and geospatial software provider Intergraph

Hexagon acquires engineering and geospatial software provider Intergraph

On 6 July 2010, Hexagon AB entered into an agreement to acquire US-based
software provider Intergraph Corporation.

Summary

  · Hexagon acquires Intergraph, a global provider of enterprise
engineering and geospatial software
  · Cash purchase price of 2 125 MUSD on a cash and debt free basis
  · The acquisition will further strengthen Hexagon's position as a
world leading measurement technology Group. Significant synergies are
expected to arise from the transaction
  · The acquisition is fully financed via bank facilities. Hexagon
intends to pursue a rights issue corresponding to 850 MUSD as soon as
practically possible following completion of the acquisition

 

Description of Intergraph

Founded in 1969, Intergraph is a leading global provider of enterprise
engineering (CAD) and geospatial intelligence software (GIS) that
enables customers to visualize and manage complex data. Businesses,
governments and security organizations in more than 60 countries rely on
Intergraph's industry-specific software solutions to organize vast
amounts of data into understandable visual representations and
actionable intelligence. Operating through two divisions, Process, Power
& Marine (PP&M) and Security, Government & Infrastructure (SG&I),
Intergraph's solutions empower customers to design, build and operate
more efficient plants, ships and offshore facilities, create intelligent
maps, protect critical infrastructure and provide security for hundreds
of millions of people around the world.

In recent years, Intergraph has consistently shown strong and resilient
financial results. In 2009, sales amounted to 770 MUSD and EBITDA to 189
MUSD. The company is expected to report sales of approximately 830-840
MUSD and EBITDA of approximately 200-210 MUSD in 2010. In 2009,
approximately 40 per cent of Intergraph's sales were generated from the
US, 36 per cent from EMEA, 15 per cent from Asia Pacific and 9 per cent
from the rest of the world.

Driven by global growth trends in key end-markets, particularly energy
consumption and the need for security and infrastructure development,
Intergraph is expected to continue to deliver significant growth in
coming years.

Intergraph is headquartered in Huntsville, Alabama, USA, and employs
approximately 4 000 people in 34 countries.

Background and reasons for the transaction

Intergraph fulfils all prerequisites that Hexagon has set for software
driven expansion. The combination of Hexagon's leadership in solutions
that capture rich geospatial data using aerial and ground based point
cloud sensor technology, with Intergraph's leadership in GIS and CAD
application software, will enable the enlarged Hexagon Group to develop
and provide unrivalled integrated solutions to clients.

Following the acquisitions of Brown & Sharpe in 2001, Leica Geosystems
in 2005 and NovAtel in 2007, Intergraph is the natural next step due to
its global software capabilities. With the integration of Intergraph,
Hexagon will cover all aspects of the measurement technology market from
capturing three dimensional data from ground, air and space, processing
data to creating, managing and delivering information via GIS and CAD
solutions.

“With the acquisition of Intergraph we are able to seamlessly connect
the real world with maps or drawings. By adding Intergraph's
technologies to our product offering, Hexagon will be able to create new
exciting solutions that will change the way our customers operate in
several industries across the world. We are indeed excited about the
future for our Group”, says Ola Rollén, President and CEO of Hexagon AB.

“We are very pleased that Hexagon has selected Intergraph to play a key
role in their software expansion strategy”, says R. Halsey Wise,
Chairman, President, and CEO of Intergraph. “Hexagon's commitment to
being number one in the market is very much in line with our existing
goals. We believe Hexagon's significant global resources and
technologies will allow further investments in our customers, software
solutions, people and future.”

Intergraph summary financial information

 

MUSD    2007  2008  2009  2010E
Sales   725   808   770   830-840
EBITDA  144   182   189   200-210

Based on current market conditions and expectations for the market
segments[1] (https://connect.ne.cision.com/#_ftn1) in which Intergraph
operates, Intergraph's sales are expected to grow organically by
approximately 10 per cent annually in the coming years and the EBITDA
margin is expected to increase gradually from the current 24-25 per cent
level. The tax rate of Hexagon including Intergraph is estimated at
18-22 per cent in the next few years.

The transaction in brief

Completion of the transaction is subject to regulatory approvals and
other customary conditions. Regulatory clearance is expected to take
approximately two to three months. Under the terms of the agreement,
Hexagon will pay a cash purchase price of 2 125 MUSD for Intergraph on a
cash and debt free basis.

The transaction is expected to be earnings accretive as from closing and
is expected to generate significant cost and sales synergies, including
new product launches, strengthening Intergraph's emerging markets
presence and combining technology platforms. Synergies, on a pre-tax
basis, are expected to amount to approximately 30 MUSD in 2011, 40 MUSD
in 2012 and 70 MUSD to EBIT as from 2013 onwards, growing sequentially
in the years thereafter.

Cash integration, transaction and refinancing costs are not expected to
exceed 65 MUSD and will be charged immediately after closing. Non cash
costs, i.e. Purchase Price Allocations, will be communicated as soon as
the opening balance sheet is established.

Transaction financing

Commitments have been secured to finance the acquisition of Intergraph
and to refinance Hexagon's existing 1 000 MEUR revolving credit
facility. As soon as practically possible following completion of the
acquisition of Intergraph, Hexagon will pursue a rights issue
corresponding to approximately 850 MUSD. Hexagon and Intergraph will
generate strong cash flow and the net debt/EBITDA ratio is expected to
be around 2.5 by 2012.

Melker Schörling AB and Ramsbury Invest AB, two of Hexagon's largest
shareholders, and Hexagon's CEO and CFO, altogether representing
approximately 53 per cent of the votes and 35 per cent of the capital in
Hexagon, have undertaken to vote in favour of the rights issue at an
extraordinary shareholders' meeting and subscribe for their pro rata
shares of the offering. Ramsbury Invest AB has also undertaken to
subscribe for approximately an additional 16 per cent in excess of its
pro rata share of the offering. Consequently, subscription commitments
for more than 50 per cent of the intended rights issue have been
received.

[1] Based on third party industry data.

 

Press and telephone conference today Wednesday 7 July at 15:00 CET

Hexagon's President and CEO Ola Rollén will give a presentation today
Wednesday
7 July at 15:00 CET at IVA, Grev Turegatan 16, Stockholm, Sweden. Please
confirm participation to info@hexagon.se. To participate via telephone
please dial in on +46 8 5055 9853, +44 20 3043 2436, +41 44 580 6524 or
+1 866 458 4087.

The presentation will be held in English and a webcast will be published
on Hexagon's website, where you can also view and listen to the
conference afterwards on-demand.

 

For further information please contact: 

Sara Kraft Westrell, Corporate Communications, Hexagon AB,
+46 8 601 26 23

Mattias Stenberg, Investor Relations, Hexagon AB, +46 8 601 26 27

 

 

 

For further information please contact:

Sara Kraft Westrell, Corporate Communications, Hexagon AB,
+46 8 601 26 23

Mattias Stenberg, Investor Relations, Hexagon AB, +46 8 601 26 27