Fiskars: Expands its luxury portfolio with acquisitions of Georg Jensen - good strategic fit and material synergy potential by 2025 - Nordea

On 14 September, Fiskars Group announced acquisition of Georg Jensen, a Danish luxury lifestyle brand, from Investcorp with USD 165m (EUR 151.5m) enterprise value. Deal value corresponds to LTM EV/sales of 1.0x, EV/EBITDA of 5.6x (9.5x excluding IFRS 16) and EV/EBIT of 11.5x. Acquisition is expected to be completed early Q4 2023, subject to customary closing conditions.

Due to purchase price allocations, Fiskars Group expects the transaction to be EPS dilutive in 2023-24. Fiskars Group’s guidance for 2023 does not take into account the acquisition, while the company expects its guidance to be negatively impacted due to PPAs. The current guidance for adjusted EBIT for 2023 is EUR 120-130m, while it will be reviewed when reasoned estimates can be made. Following the acquisition, Fiskars Group direct-to-consumer sales share of sales increases to ~24% (21% in 2022) while sales split between Vita and Fiskars (according to the new reporting structure effective from the beginning of Q4 2023) will be even.

Georg Jensen sales split is evenly distributed between jewelry and home and it will be another brand for Fiskars Group with above EUR 100m sales. In 2022, Georg Jensen had net sales of EUR 153.5m with 62% gross margin, EBITDA of 30.6m (19.4% margin) and EBIT of EUR 14.9m (9.4% margin). Given the challenging market conditions, Georg Jensen LTM (until June 2023) net sales were EUR 153.5m with EBITDA of EUR 26.9m and EBIT of EUR 11.5m. Fiskars Group expects material, EUR 18m, synergies from the acquisition within next 24-months, mainly through support functions and sourcing. Transaction costs are expected to be EUR 5m (recorded in Q4 2023), while integration costs related to acquisition are expected to be EUR 10m, in 2024-26.

Given the scale of synergies, we expect Fiskars Group to consolidate its sourcing and possibly manufacturing footprint. The acquisition will be fully debt financed. At the end of Q2 2023, Fiskars Group net debt was EUR 342m with a leverage of 2.08x. On a pro forma level, leverage would increase to 2.6x at the end of Q2, while we note that the company has been focusing on profit and cash flow protection in 2023.

We have anticipated strong cash flows in H2 and do not expect temporarily higher leverage to be any issue for the company. Based on the confidence of the management, we expect relatively fast organic deleverage after the acquisition. Targeted synergies are material and we note that the company has a good track record on reaching its targeted cost savings. The acquisition appears to be a good strategic fit for Fiskars Group and we expect smoother integration of the businesses compared to e.g. English & Crystal Living business acquired in 2015.

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