Brammer boosts European reach with £45m Lonne deal

INDUSTRIAL parts distributor Brammer is buying a leading Scandinavian company, Lonne Holding.  in a deal worth up to £45.8m.

Lonne, headquartered in Bergen, Norway, is currently jointly owned by investment group Credo Invest and founder and former chief executive Terje Lonne.

Lonne is a leading distributor of OEM and MRO industrial products, operating predominantly in Norway and Sweden with further operations in Finland and Denmark.

Its product range includes motors, inverters, bearings and power transmission and the company has 4,500 active customers principally in oil and gas, fisheries, mining, energy and food processing.

Customers are served through a network of 15 branches and a Nordic central warehouse in Helsingborg, southern Sweden. The Lonne management team led by chief executive Ole Jacob Myre will remain with the business post acquisition and Terje Lonne, who is now in his early 70s, having built the business up over more than 40 years, will remain as an adviser and director of the business.

Wythenshawe-based Brammer is paying an initial £19m in cash, and will then assume net debt of some £18.8m on completion. A deferred cash consideration of up to £8m is payable based on a multiple of the increased EBITDA over set targets for each of the years 2014, 2015 and 2016.

The consideration for the acquisition will be satisfied through borrowings from Brammer’s existing facilities. The deal is expected to complete later this month and be earnings enhancing in 2014.

Brammer said the acquisition would support its strategy of growing its core distribution business, and Lonne will give it a leading presence in the Nordic market and also provide cross-selling opportunities to Lonne’s customer base particularly in tools and general maintenance.

Brammer chief executive Ian Fraser said: “Lonne is an excellent strategic acquisition for the group, providing us with the opportunity to enhance our position significantly in the Nordic region, an important growth market.

“We look forward to working alongside Lonne’s highly experienced and knowledgeable team and through the support of Brammer’s market leading pan-European distribution network, product offer and expertise we are well placed to leverage a number of cross selling opportunities, improve margins and drive the Lonne business forward.”