26.06.2018

Cramo to acquire Swedish modular manufacturer

Cramo is to acquire Swedish-based, high-quality temporary building manufacturer Nordic Modular Group in a deal that values the company at around SK2.7 billion (€263 million)

The deal which will be funded by bank financing and convertible notes, which may be used by the sellers to reinvest in Cramo’s Modular Space business.
Nordic Modular was founded in 1956. Its principal market is in Sweden with operations in Norway, Denmark and Finland. It employs 230 and had flat revenues of SK 779 million (€75 million) in 2017, with operating profits of SK160 million (€15.5 million) but first quarter sales increased by 26 percent.
Around half the company’s revenues come from rental and leasing of its buildings.

The company serves municipal customers, county councils and private companies with a primary focus on schools, elderly housing solutions and offices. It operates through three subsidiaries Flexator, Temporent and Nordic Modular Leasing.
Temporent operates a short-term rental fleet of 6,500 cabin modules serving primarily municipalities and large private companies. Nordic Modular Leasing covers longer term contracts, while Flexator designs, manufactures and sells the buildings.

Cramo chief executive Leif Gustafsson said: “The acquisition is fully in line with our Shape and Share strategy and will strengthen Cramo’s position in the Nordic modular space market supporting our ambitions to grow profitably. NMG is an ideal complement to our current modular business operations, strengthening our competitiveness in the Nordics and creating a platform for further international expansion. As announced in December 2017, we are investigating the separation and potential demerger of the Modular Space (Cramo Adapteo) business division.”

“This assessment of different strategic alternatives continues and will be carried out during 2018. By bringing inhouse development and production capabilities, the acquisition of NMG further strengthens Cramo’s Modular Space business on the overall Nordic modular space market and is therefore expected to increase Cramo’s latitude in exploring strategic alternatives for the Modular Space business. In addition, the transaction expands our business model and enables the development of new products and customer solutions.”

Henrik Jonsson, managing director of Nordic Modular’s owner Nalka Invest added: “This is an excellent opportunity to combine NMG’s operations with another premium company in the modular space market which is capable of taking the modular business to the next level. I’m convinced that the company has found a great new owner with Cramo who will continue to develop and grow the business together with professional employees at NMG.”

Vertikal Comment

This is an interesting move with a longer term aim linked to Cram’s plan to float or separate its cabin rental business. Nordic’s owner Nalka Invest, has stated that it might be interested in investing in the industry, and is likely to become a future shareholder in any demerged Cramo modular space business. As such this deal probably has more to do with Cramo’s mid term strategy to separate its main rental operations from its cabin rental business than a simple growth acquisition.