Stille AB (publ) (“Stille” or the “Company”) has entered into an agreement to acquire all shares outstanding of Fehling Instruments GmbH & Co. KG and Fehling Verwaltungs GmbH (jointly “Fehling”) for a consideration of EUR 36 million (approximately SEK 410 million) on a cash- and debt-free basis. The acquisition is conditional upon the Company receiving sufficient financing to carry out the acquisition and the Company’s board of directors thus intends to resolve on a directed issue of shares subject to the general meeting’s subsequent approval. Through the acquisition, Stille significantly broadens its product offering, global footprint and R&D capabilities. In 2022, Fehling reported sales of EUR 15.8 million, and adjusted EBITDA of approximately EUR 4.8 million. The acquisition of Fehling is expected to be completed end of January 2024, provided that all conditions have been met.
Background and acquisition of Fehling
Long history of manufacturing premium surgical instruments
Fehling is a family-owned German company, founded in 1996, that develops and sells high-quality medical instruments. Fehling has a strong market position with direct operations in Germany, Switzerland, USA, Singapore, UAE, and Malaysia. With over 30 years of industry experience, Fehling strives to provide a broad range of premium products to surgeons, with focus on demanding specialties such as open and minimally invasive cardiac, thoracic, neuro-, and spine surgery. Fehling boasts a global sales footprint combined by direct sales and distributors. The sales growth in 2022 amounted to 9 percent with a mix of sales divided between traditional instruments amounting to approximately 72 percent, micro instruments amounting to approximately 18 percent and MICS amounting to approximately 10 percent.1
Broadened product offering and strengthened position within surgical instruments
The acquisition is aligned with Stille’s strategic objectives for growth and highlights the opportunities for consolidation in the niche and fragmented market of premium surgical instruments. Through the acquisition, Stille will significantly broaden its product offering. Through Fehling’s direct sales channels and existing distributor relationships, Stille will also increase its global presence and further strengthen its position in strategically important markets.
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“The acquisition of Fehling means that we strengthen our offering as the most high-quality manufacturer of surgical instruments in the premium segment within selected, niche clinical segments. This brings significant value to Stille’s operations. Stille’s surgical product offering is now strongly complemented, and the respective companies’ distribution channels provide significant opportunities for increased sales,” comments Torbjörn Sköld, CEO, Stille.
The combined entity2
The combined entity had for the financial year 2022 sales of approximately SEK 426 million (352) with adjusted EBITDA of approximately SEK 97 million (65). The group, post-acquisition, will have direct operations in Sweden, Germany, Switzerland, USA, Singapore, UAE, and Malaysia. Fehling will become a part of Stille’s Surgical Instruments business unit. Following the acquisition, Stille’s earnings per share is expected to significantly increase. Gerald Fehling, CEO of Fehling, will retain his position, and be a part of Stille’s executive management team.
“I look forward with confidence to being a part of Stille’s organization, integrating our operations and realizing synergies” comments Gerald Fehling, CEO, Fehling
“We have a clear strategy and growth agenda within Stille. We are delighted to have now succeeded in acquiring another business that meets our criteria in terms of focus, profitability, and growth potential. The acquisition marks an important step in Stille’s ongoing journey to be a leading player in the premium segment for surgical instruments,” comments Lars Kvarnhem, Chairman of the Board, Stille.
1Please see the appendix with financial information for Fehling, which is a part of this press release.
2EUR/SEK of 11.43.
Terms of the transaction and financing
The acquisition is conditional upon the Company receiving sufficient financing to carry out the acquisition and the Company’s board of directors thus intends to resolve on a directed issue of shares subject to the general meeting’s subsequent approval. The consideration for Fehling constitutes a cash and debt-free value of EUR 36 million (approximately SEK 410 million) and will be funded through cash. Stille intends to conduct a directed share issue to institutional investors with deviation from the shareholders’ pre-emption rights to finance the consideration. The acquisition of Fehling is expected to be completed at the end of January 2024 provided that the above condition is met. Fehling will be consolidated into Stille upon closing of the acquisition.
Stille has appointed Pareto Securities (“Pareto”) as Sole Manager and Bookrunner in connection with the directed share issue to a selected group of investors (i.e., a club deal), which will be announced separately immediately after the publishing of this press release.
