• The total consideration amounts to approximately SEK 2.2 billion[2] of which approximately SEK 442 million is paid in cash and through a non-cash issue of 5,760,883 newly issued shares to the sellers of Cybercom, corresponding to a dilution of 22.5%. Through the transaction, the selling main shareholders of Cybercom, Formica Capital and JCE Group, will become the largest owners in Knowit, with a holding of 10 percent each of the total number of shares and votes outstanding.

• The non-cash issue is conditional upon the approval by an Extraordinary General Meeting, scheduled for May 28, 2021, authorizing the Board to resolve on the new share issue. The Company has been in contact with all of the major shareholders and has overall received a positive feedback. Shareholders representing approximately 18 percent of the total number of shares and votes have expressed that they intend to support the Board of Directors' proposal, including Nordea Fonder, Handelsbanken Fonder, Carnegie Fonder and Länsförsäkringar Fonder.

• In connection with the acquisition, the Board of Directors has updated the financial targets and the dividend policy. Further, in order to increase financial flexibility the Board of Directors is seeking an EGM approval for authorization to resolve on a share issue corresponding to a maximum of SEK 500 million.

Per Wallentin, CEO of Knowit, commented the acquistion:

"For several years, we have seen a development towards more complex customer needs that require our expertise through the entire value chain, from product development to completely new customer interfaces and processes. Cybercom will complement our offering with more technology-oriented services and a sustainability offering at the forefront. We are strengthening our market position in areas that are developing rapidly - cyber security, cloud services and digital solutions to society's sustainability challenges."

"Through this acquisition, we become a very attractive partner for both customers and employees, and establish a platform for a continued strong growth journey."

A Nordic powerhouse for for digital solutions with a sustainable impact
Demand for digitalisation is strong in the long term in both the private and public sectors, both as an effect of changing customer behavior but also as a result of the development of new technology and innovations that provide the opportunity to develop smarter and more sustainable solutions.

Knowit and Cybercom complement each other well, and will through the merger become an attractive partner with a strong employer brand and with a common vision to drive and accelerate the digital transformation towards tomorrow's sustainable business models. Knowit is already today well positioned in digital transformation with broad expertise in system development (Knowit Solutions), web and e-commerce (Knowit Experience) and strategy consulting (Knowit Insight). With Cybercom's specialization in connectivity, IoT, cloud-based solutions, and the growing area of cyber and society security, the offer is strengthened primarily to customers in the tech, industrial and telecom sectors. A new business area, Knowit Connectivity, is formed and Knowit grows from approximately 2,600 to more than 3,800 employees.

In addition to increased ability to take on larger and more complex projects, the acquisition also opens up for opportunities for growth through access to new markets. Knowit has a strong position in Norway while Cybercom is well-positioned in Finland, where the business together with Knowit will increase by 250 employees to a total of around 400.

The integration of Knowits and Cybercom's operations will primarily generate new business opportunities, but will also drive annual cost synergies of approximately SEK 45 million. Overall, the new group is expected to create a platform for continued profitable growth, and Knowit expects the acquisition to be accretive to earnings per share during 2022.

The two organizations will be brought together under the Knowit brand. In connection with the transaction, Annika Nordlander, today Head of Cybercom Sweden, will become Head of the newly formed business area Knowit Connectivity. Bo Strömqvist, today Head of Sales at Cybercom, will also join Knowit's Group Management with responsibility for strategic customer relations, an area that will be particularly important in connection with the integration of Cybercom and Knowit's growth plans. Niklas Flyborg, CEO of Cybercom, will remain as an advisor to Group Management for a transitional period.

"It has been a fantastic journey in a market under rapid development, and Cybercom is now ready to take the next step. We have been engaged in sustainability for over a decade, and I am convinced that Knowit is the right partner, since we share the same driving force, to help customers change their business in a sustainable direction." said Niklas Flyborg, CEO of Cybercom.

"Cybercom has a strong position with customers in the industrial and telecom sectors. Knowit and Cybercom complement each other well and together we can continue to grow in all markets. Both companies share a vision of contributing to a sustainable society which we believe is very attractive for our competent and ambitious employees, our customers and society at large", said Annika Nordlander, Head of Knowit Connectivity.

The investment companies Formica Capital and JCE Group are today the largest owners of Cybercom and will, after the completion of the transaction, be the largest owners in Knowit.

"Cybercom is a fantastic company with competent employees and we are convinced that this transaction is strategically sound for all parties - the operations complement each other well and constitute a strong platform for continued acquisition-based growth. We see our ownership in Knowit as a long-term investment in one of the strongest and most fast-growing digitalisation companies in the Nordics, with excellent opportunities to leverage on Cybercom's sustainability position", said Olof Cato, CEO of Formica Capital and Chairman of Cybercom.

Financing of the acquisition of Cybercom and notice of an Extraordinary General Meeting
The consideration amounts to approximately SEK 2.2 billion of which SEK 442 million is paid in cash and through a non-cash issue of 5,760,883 newly issued shares[3]. The non-cash issue is conditional upon the approval of an Extraordinary General Meeting, scheduled for May 28, 2021, authorizing the Board to resolve on the new share issue. The Company has been in contact with all of the major shareholders and has overall received a positive feedback. Shareholders representing approximately 18 percent of the total number of shares and votes have expressed that they intend to support the Board of Directors' proposal, including Nordea Fonder, Handelsbanken Fonder, Carnegie Fonder and Länsförsäkringar Fonder.

The cash part of the consideration is financed by a credit commitment of SEK 700 million from Nordea. The Board will also propose the Extraordinary General Meeting to authorize the Board to resolve on a cash issue of shares, with or without preferential rights for the Company's shareholders, corresponding to proceeds up to a maximum of SEK 500 million. The purpose of the authorization is to increase the financial flexibility to be able to take advantage of continued opportunities in line with the Company's growth agenda. Notice of the Extraordinary General Meeting is published in a separate press release.

Cybercom had sales of SEK 1.7 billion and EBITA of SEK 184 million for FY2020[4]. The combined entity will have total sales of SEK 5.5 billion and EBITA of SEK 541 million FY2020. The enterprise value corresponds to an EBITA multiple of 13x for FY2020 (before synergies). The combination of Knowit's and Cybercom's operations will primarily generate new business opportunities, but also drive annual cost synergies of approximately SEK 45 million. Knowit expects the acquisition to be accretive to earnings per share in 2022.

Other terms
The acquisition is conditional upon the authorization by the Extra General Meeting for the Board of Directors to resolve on the non-cash issue of 5,760,883 Knowit shares. Knowit's acquisition of Cybercom is also conditional upon customary approvals from the competition authority in Sweden, expected to be received before the end of the second quarter 2021. The acquisition of Cybercom is expected to be completed by the turn of June/July 2021.

Knowit updates financial targets
In connection with the acquisition, the Board of Directors has updated the financial targets and the dividend policy (announced in a separate press release today):

• Growth target: Annual sales growth exceeding market growth, targeting an annual growth of around 15 percent over time. Growth is to be achieved sustainably by continued organic growth and acquisitions.
• Earnings target: EBITA target of 12 percent in relation to sales over time.
• Capital structure: Net debt in relation to EBITDA should not exceed 2x over time.
• Dividend policy: The ambition is a dividend corresponding to 40-60 percent of profit after tax.

Further, Knowit's ambition is to update its non-financial sustainability targets during the course of the year.

Webcast

Knowit has issued an invitation to a webcast to present the acquisition on May 5 2021 at 10:00 AM. The presentation will be held in English. Link to the presentation: https://www.investis-live.com/knowit/608bd09323de2919000370b9/khjb  

Telephone numbers for the conference call:

Sweden and other EU countries: 010 884 80 16

UK: 020 3936 2999

USA: 1 646 664 1960

All other locations: +44 203 936 2999

Participant access code: 911396  

This information is information that Knowit AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of Per Wallentin, CEO, at 2021-05-05 07:00 CEST.

[1] Combined sales and  EBITA FY2020 for Knowit och Cybercom, proforma-adjusted for Knowit's acqusition of Creuna (November 2020) and Cybercom's acquisition of Solutive Oy (November 2020)

[2] The total consideration corresponds to SEK 2.4 billion on a cash and debt-free basis (enterprise value), based on the average volume-weighted share price for Knowit's share on Nasdaq Stockholm for each day during the ten trading days immediately preceding the day of signing of the share purchase agreement. Cybercom's net debt at the time of the acquisition amounts to approximately SEK 238 million.

[3] The newly issued shares are not entitled to the dividend of SEK 7 per share proposed by the Board of Directors to the AGM on 11 May, 2021. The newly issued shares held by Formica Capital and JCE Group are subject to a lock-up agreement for six months after closing.

[4] Proforma-adjusted for Cybercom's acquisition of Solutive Oy (November 2020).