Methode Electronics Announces a Cash Offer to Acquire Nordic Lights Group Corporation

Rhea-AI Summary

Methode Electronics, Inc. (NYSE: MEI) has announced a public tender offer for Nordic Lights Group Corporation at EUR 6.30 per share, valuing the acquisition at approximately EUR 132 million. Nordic Lights specializes in high-quality LED lighting solutions for heavy-duty equipment, serving sectors such as mining and construction. Methode anticipates that the acquisition will positively impact earnings and free cash flow in fiscal 2024, funded through cash reserves and existing credit. The deal requires over 90% shareholder acceptance for completion and is expected to finalize in H2 2023, pending customary conditions and regulatory approvals.

Positive

• Acquisition expected to be accretive to earnings and free cash flow in fiscal 2024.
• Strategic alignment with Methode's existing LED lighting solutions, enhancing market presence.
• Funding through cash and existing credit minimizes financial strain.

Negative

• Completion relies on the acceptance of over 90% of Nordic Lights shareholders, which poses a risk.

CHICAGO, Feb. 28, 2023 (GLOBE NEWSWIRE) -- Methode Electronics, Inc. (NYSE: MEI), a leading global supplier of custom-engineered solutions for user interface, LED lighting system and power distribution applications, announced that it has entered into a definitive agreement pursuant to which it will launch a recommended public tender offer for all of the outstanding shares of Nordic Lights Group Corporation (“Nordic Lights”), at an offer price of EUR 6.30 per share, for a total equity value of approximately EUR 132 million. Nordic Lights is a premium provider of high-quality lighting solutions for heavy-duty equipment and a public limited liability company incorporated in Finland with its shares admitted to trading on Nasdaq First North.

Excluding pre-tax costs related to the transaction, Methode expects the acquisition to be accretive to earnings and free cash flow on a per share basis in fiscal 2024 prior to any potential synergies and inclusive of estimated amortization, purchase accounting adjustments and interest expense. Methode expects to fund the purchase with a combination of cash on hand and debt financing under its existing credit facility. The transaction is not subject to a financing condition.

Nordic Lights focuses on providing premium lighting solutions to five end-user segments: mining, construction, forestry, agriculture and material handling. Nordic Lights manufactures lights for three main application areas: work lights, driving lights and signal lights for heavy duty equipment. Nordic Lights’s products are mainly based on light-emitting diode (“LED”) technology, but its product offering also includes HID (i.e., Xenon) lights. Nordic Lights is headquartered in Pietarsaari, Finland, and had 271 employees worldwide as of December 31, 2022.

President and Chief Executive Officer Donald W. Duda said, “Methode considers Nordic Lights to be highly complementary to its own existing LED lighting solutions. In addition, the business aligns well with our inorganic growth framework given its focus on engineered solutions for OEMs, its industrial and non-auto transportation market exposure, and its customer and geographic diversity. We look forward to working closely with the talented Nordic Lights team to grow and strengthen their business even further.”

The transaction is subject to the satisfaction (or waiver by Methode) of customary closing conditions for the acquisition of a public company in Finland, including, amongst others, (i) that the tender offer is irrevocably accepted by shareholders holding more than 90 percent of the shares and voting rights in Nordic Lights, which will enable Methode to compulsorily acquire the remaining shares in the capital of Nordic Lights under Finnish law, and (ii) the receipt of all necessary regulatory approvals. The transaction is expected to be completed (including completion of the compulsory acquisition of Nordic Lights shares from any non-tendering minority) in the second half of 2023.

Moelis & Company LLC acted as exclusive financial advisor to Methode. Wachtell, Lipton, Rosen & Katz, together with Hannes Snellman Attorneys Ltd served as Methode’s outside legal co-counsel. Hill+Knowlton Strategies served as Methode’s communications advisor.

About Methode Electronics, Inc.
Methode Electronics, Inc. (NYSE: MEI) is a leading global supplier of custom-engineered solutions with sales, engineering and manufacturing locations in North America, Europe, Middle East and Asia. We design, engineer, and produce mechatronic products for OEMs utilizing our broad range of technologies for user interface, LED lighting system, power distribution and sensor applications.

Our solutions are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing infrastructure, construction equipment, consumer appliance, and medical devices. Our business is managed on a segment basis, with those segments being Automotive, Industrial, Interface and Medical.

Forward-Looking Statements
This announcement contains statements that, to the extent they are not historical facts, constitute “forward-looking statements”. Forward-looking statements include statements concerning plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position, future operations and development, business strategy and the trends in the industries and the political and legal environment and other information that is not historical information. In some instances, they can be identified by the use of forward-looking terminology, including the terms believes”, “intends”, “may”, “will” or “should” or, in each case, their negative or variations on comparable terminology. By their very nature, forward-looking statements involve inherent risks, uncertainties and assumptions, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. Given these risks, uncertainties and assumptions, investors are cautioned not to place undue reliance on such forward-looking statements. Any forward-looking statements contained herein speak only as at the date of this release.

For Methode Electronics, Inc.
Robert K. Cherry
Vice President Investor Relations
rcherry@methode.com
708-457-4030

FAQ

What is the purpose of Methode's acquisition of Nordic Lights?

Methode aims to enhance its LED lighting solutions and expand its market presence through the acquisition of Nordic Lights.

What is the total value of the Nordic Lights acquisition by Methode Electronics?

The acquisition is valued at approximately EUR 132 million.

When does Methode expect the Nordic Lights acquisition to be completed?

Methode anticipates the transaction to be completed in the second half of 2023.

How will Methode fund the acquisition of Nordic Lights?

Methode plans to fund the acquisition using cash on hand and debt financing under its existing credit facility.

What are the expected benefits of the Nordic Lights acquisition for Methode shareholders?

Methode expects the acquisition to be accretive to earnings and free cash flow per share in fiscal 2024.