Press release BoxID: 550742 (Dätwyler Cables GmbH)
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Datwyler to focus on high-growth, high-margin businesses

(PresseBox) (Hallbergmoos, ) .

- New focus on two divisions:

- Sealing Solutions: combining the present Pharma Packaging and Sealing Technologies Divisions

- Technical Components: current division offering leading online/catalogue distribution brands

- Leading competitive and market positions providing a strong foundation for continued global growth

- Cabling Solutions Division to be sold to Pema Holding AG (majority shareholder of Dätwyler Holding Inc.) for CHF 95 million

- Cash inflow to be used for further growth in the Group

- Datwyler also planning to issue straight bond of approx. CHF 100 million to 150 million to fund additional growth

- Potential synergies to be realised within the Sealing Solutions Division (about CHF 10 million as of 2015)

Datwyler is streamlining its Group structure and will now focus on high-growth, high-margin businesses. To achieve this, the present Sealing Technologies and Pharma Packaging Divisions will be combined to form the new Sealing Solutions Division, while the current Cabling Solutions Division will be sold to Pema Holding AG (majority shareholder of Dätwyler Holding Inc.).

"By concentrating on the two divisions Technical Components and Sealing Solutions, Datwyler is consolidating forces and focusing its growth strategy on attractive markets", comments Paul Hälg, CEO of the Datwyler Group. "In both businesses, we will continue to expand our leading positions in current markets and enter new market segments in the medium term."

Cabling Solutions Division to be sold to Pema Holding AG

Despite a difficult industry environment, Datwyler has built up strong regional niche positions with Cabling Solutions in recent years. In 2011, the division generated net revenue of CHF 240.9 million and operating profit (EBIT) of CHF 4.6 million (1.9% EBIT margin). From today's point of view, Cabling Solutions has only limited potential to further increase value within the Datwyler Group. For this reason, the entire division will be sold to Pema Holding AG for CHF 95 million. Being a private owner, Pema is better placed to successfully develop and expand the Cabling Solutions operations.

Pema Holding AG will take over all facilities and the entire workforce of the Cabling Solutions Division. The operational management and Datwyler trade name will also remain unchanged and ensure continuity. Agreements to use the trademarks and for other management services have been signed with Dätwyler Holding Inc. Hanspeter Fässler will serve as Chairman of the new Board of Datwyler Cabling Solutions AG. He is also a Director of Pema Holding AG and Dätwyler Holding Inc. During a transition phase, the Datwyler Group's CEO and CFO, Paul Hälg and Reto Welte, will also serve as Directors of Datwyler Cabling Solutions AG. Johannes Müller will continue to head the Cabling Solutions business as CEO, but will leave the Executive Management of publicly listed Dätwyler Holding Inc. at the end of 2012.

Impartial valuation reports to set the price

As Pema Holding AG and Dätwyler Holding Inc. are related, the two parties commissioned two impartial valuation reports (KPMG and Deloitte) to set the price of the Cabling Solutions Division.

Those Directors of Dätwyler Holding Inc. who also serve on the Board of Pema Holding AG abstained from voting. In his capacity as the Bearer Shareholders' Representative on Dätwyler's Board of Directors, Ernst Lienhard considers the price to be appropriate and fair for the publicly listed Group and approved the acquisition by Pema Holding AG. The transaction is not subject to any conditions and will be completed on 31 December 2012. In the Datwyler Group, the transaction will generate a cash inflow of CHF 95 million and lead to a one-off accounting gain estimated at about CHF 3 million in 2012.

Combining the Pharma Packaging and Sealing Technologies Divisions

The Datwyler Group's structure will be further streamlined by combining the two divisions Pharma Packaging and Sealing Technologies to form the new Sealing Solutions Division. The industrial logic behind the initiative to combine the two present divisions is mainly to consolidate materials and engineering expertise as well as manufacturing and process skills. Over the years, the two divisions' factors for success have increasingly converged. On the sales side, both divisions hold leading positions, providing bespoke products in the global markets addressed. Both divisions are extremely quality conscious and have high-volume, highly automated manufacturing processes.

Added to that, they have very similar supplier structures in procurement of raw materials and production equipment.

Enhancing competitiveness and increasing profitability

The new Sealing Solutions Division operates its own high-performance manufacturing facilities located in the three principal economic regions: Asia, Nafta and Europe. One example is the new pharmaceutical components plant in India, which has recently been getting mass production up and running. The acquisition of Zhongding, China's leading manufacturer of sealing components for the automotive industry, has also been completed. Datwyler will combine the best of both worlds in the new Sealing Solutions Division and consequently expects to realise potential synergies of about CHF 10 million as of 2015. By consolidating operations, especially in the areas of management and administration, know-how and development, procurement, manufacturing and global expansion, the company will be able to enhance competitiveness and increase profitability.

Sealing solutions for current and new global markets

The new Datwyler Sealing Solutions Division employs some 5,000 people at 17 facilities of its own and will generate annual revenue of more than CHF 600 million from 2013 onwards. An EBIT margin range of between 11% and 14% is targeted. These figures include the Zhongding and Hankook companies acquired in China and Korea on 12 October 2012. The new Datwyler Sealing Solutions Division will be headed by Dirk Lambrecht, the current CEO of the Sealing Technologies Division. Guido Wallraff, the current CEO of the Pharma Packaging Division, will be responsible for Global Business & Customer Relations in the new division. He will therefore leave the Executive Management of publicly listed Dätwyler Holding Inc. with immediate effect. Today, Datwyler supplies rubber sealing solutions to the global pharmaceutical, diagnostics, automotive, civil engineering and portioned food (Nespresso) markets. Initially, Datwyler wants to build on its leading competitive and market positions as a strong foundation for continued global growth in the current markets. Then in a second phase, the company plans to enter new markets, such as medical, chemical or oil and gas solutions, through organic growth and acquisitions. In addition, Datwyler intends to extend its materials expertise to new materials, similar to what has been successfully done in the collaboration with Nespresso. The markets that can be addressed over the medium term have a total volume in excess of CHF 4 billion.

Technical Components to remain a growth business

Datwyler will also continue to pursue its growth strategy in the Technical Components Division as before. Building on the division's previous companies, Distrelec and Maagtechnic, the Group has acquired Swedish-based Elfa (2008), German-based Reichelt Elektronik (2010) and Dutch-based Nedis (2012) over the past four years. This has positioned Datwyler as one of Europe's leading online/catalogue distributors of IT, electronic and engineering components and accessories. With the addition of Nedis, the Group is now present in all European countries, although it does not yet rank among the leading suppliers everywhere. In future, Datwyler is seeking to increase market penetration in all countries covered, both by acquiring more businesses and by launching existing Datwyler brands in additional countries. The multibrand concept will allow Datwyler to serve different customer groups concurrently in the same geographical markets. The markets that can be addressed over the medium term have a total volume in excess of CHF 8 billion.

Multibrand concept to systematically capitalise on synergies

As online/catalogue distributors, Datwyler's brands provide a link between more than 1,000 suppliers and over half a million active customers. With its size and presence, Datwyler will benefit from the trend where international business customers are increasingly seeking to optimise their supply chain management by buying as much of their purchasing volume as possible from the fewest possible, but most reliable suppliers. While deliberately maintaining and developing several brands on the market side, Datwyler is systematically capitalising on synergies in procurement, product management, logistics, IT and marketing. The Datwyler Technical Components Division employs some 2,000 people at 34 facilities of its own and will generate annual revenue of more than CHF 700 million from 2013 onwards. An EBIT margin range of between 10% and 13% is targeted. These figures include the Dutch-based Nedis Group acquired on 3 September 2012. The Technical Components Division will still be headed by Markus Heusser as before.

Two strong and complementary divisions

Datwyler's two future divisions have different business cycle profiles, thus reducing fluctuations in the Group's margin. In particular, the pharmaceutical and Nespresso operations (together making up nearly one third of the Group's revenue in future) are largely unaffected by general industrial cycles and enjoy stable growth. Both divisions generate attractive, double-digit EBIT profit margins that can be increased even further with continued expansion of markets and applications.

A financially strong Datwyler Group with new EBIT targets

By putting the new Group structure in place, Datwyler wants to capitalise even more on attractive growth opportunities in the European distribution markets and global sealing markets in the future.

It has sufficient resources to fund the planned organic growth and further acquisitions. In 2012, the Group's liquidity will increase by CHF 132 million from the announced sale of properties in the canton of Uri and from the divestment of the Cabling Solutions Division. Datwyler also plans to issue a straight bond of approximately CHF 100 million to 150 million in nominal value over the weeks ahead. In addition, Datwyler has credit facilities of more than CHF 300 million available and holds more than 1.5 million treasury shares. Given the strong balance sheet structure with a high equity ratio, additional debt capital could be raised, if required. The concentration on high-margin businesses allows Datwyler to increase its previous EBIT margin targets. For 2013, the Group is raising the target range to between 10% and 13%, with planned revenue of more than CHF 1,300 million. Given its technological leadership and strong market positions, the Datwyler Group is seeking to generate CHF 2 billion in revenue and an EBIT margin of between 12% and 15% by 2017.

Further information:

To discuss the latest news, a press and analyst conference will be held tomorrow, 30 October 2012, at 10:00 hours at the Park Hyatt Hotel, Beethoven-Strasse 21, 8002 Zurich

(in German), and a conference call (in English) at 15:00 hours CET.

Speakers: Datwyler CEO Paul Hälg and Datwyler CFO Reto Welte.

Dätwyler Cables GmbH

The Datwyler Group is a focused industrial component supplier with leading positions in global and regional market segments. With its technological leadership and bespoke solutions, the Group delivers added value to customers in the markets served. Datwyler concentrates on markets that offer opportunities to create more value and sustain profitable growth. The Technical Components Division is one of Europe's foremost highservice distributors of IT, electronic and engineering components and accessories. The Sealing Solutions Division is a leading supplier of bespoke sealing solutions to global market segments, such as the automotive, pharmaceutical and civil engineering industries etc. With a total of more than 50 operating companies, sales in over 100 countries and more than 7,000 employees, the Datwyler Group generates annual revenue in excess of CHF 1,300 million. The Group has been listed on the SIX Swiss Exchange since 1986 (security number 3048677).