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Sandvik to acquire software company CGTech

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Sandvik has announced its agreement to acquire CGTech, a leader in NC/CNC simulation software, for an undisclosed amount. This acquisition aligns with Sandvik's strategy to expand in the digital manufacturing space. CGTech, which generated SEK 470 million in revenue in 2019, will enhance Sandvik's capabilities in machining intelligence and broaden its software offerings. The deal, expected to close in Q4 2020, aims to improve customer solutions and is projected to have a neutral impact on Sandvik’s earnings per share initially.

Positive
  • Acquisition of CGTech expands Sandvik's capabilities in digital manufacturing.
  • Strengthens market position in machining solutions and reduces waste in customer value chains.
  • Expected to enhance software offerings and provide full machining solutions.
Negative
  • CGTech's EBIT margin is slightly dilutive to Sandvik's existing margins.

SANDVIKEN, Sweden, Oct. 19, 2020 /PRNewswire/ -- Sandvik has signed an agreement to acquire US based CGTech, a global market leader in software for numerical control (NC/CNC) simulation, verification and optimization. The product offering includes VERICUT®, a machining simulation and optimization software which is CAM, machine tool manufacturer and cutting tool neutral and works stand alone or in conjunction with all major CAM suppliers. The company will be reported in Sandvik Coromant, a division within Sandvik Machining Solutions.

"This is in line with our strategic focus to grow organically and through acquisitions in the digital manufacturing space, with special focus on software solutions close to machining," says Stefan Widing, President and CEO of Sandvik.

The combined machining expertise of Sandvik Coromant and CGTech will enhance the Group's capabilities in machining intelligence, strengthen the software offering and facilitate an improved presence in key areas of the customer value chain.

"It's exciting to say that we are able to expand our capabilities with CGTech. This will not only strengthen our leading market position in all parts of the world but will as well enable us to take a big step forward in offering full machining solutions to our customers, which will reduce waste significantly in their broader value chain," says Nadine Crauwels, President of Sandvik Machining Solutions.

CGTech is headquartered in California, USA, and has about 180 employees. In 2019, CGTech had revenues of about SEK 470 million and an EBIT margin slightly dilutive to Sandvik Manufacturing and Machining Solutions' margin. Impact on Sandvik's earnings per share will initially be neutral.

The transaction is expected to close during the last quarter of 2020 and is subject to customary regulatory approvals.

Conference call

There will be a conference call related to the intended acquisition on 20 October 2020 at 16.00 CET for analysts, investors and financial media. The conference call will also be available live in `listen-only' mode on Sandvik's website. Please see home.sandvik for the dial-in details and presentation material.

Dial-in numbers for the conference call:

Sweden: +46 8 566 426 93

UK: +44 333 300 9031

US: +1 833 526 8381

Stockholm, 19 October 2020

Sandvik AB

For further information, contact Emelie Alm, Investor Relations Officer, phone: +46 79 060 87 17, or Martin Blomgren, Press and Media Relations Manager, phone: +46 70 577 0549.

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/sandvik/r/sandvik-to-acquire-software-company-cgtech,c3218304

The following files are available for download:

https://mb.cision.com/Main/208/3218304/1320726.pdf

Sandvik to acquire software company CGTech

Cision View original content:http://www.prnewswire.com/news-releases/sandvik-to-acquire-software-company-cgtech-301154943.html

SOURCE Sandvik

FAQ

What is the purpose of Sandvik's acquisition of CGTech?

The acquisition aims to expand Sandvik's capabilities in digital manufacturing and enhance its software offerings in the machining sector.

What impact will the acquisition of CGTech have on Sandvik's financial performance?

The impact on Sandvik's earnings per share is expected to be initially neutral.

When is the acquisition of CGTech expected to close?

The transaction is expected to close during the last quarter of 2020.

What were CGTech's revenues in 2019?

CGTech had revenues of approximately SEK 470 million in 2019.

How will CGTech's acquisition affect Sandvik's market position?

The acquisition is expected to strengthen Sandvik's leading market position and improve its presence in key areas of the customer value chain.

SANDVIK AB S/ADR

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