NKT acquires SolidAl, adding medium- and high-voltage capacity to address growing grid demand

As the electrification of society continues to gain momentum, power generation and consumption is increasing. Upgrading Europe’s aging power grid infrastructure and connecting a growing number of renewable power projects is driving demand for medium- and high-voltage power cables. According to the International Energy Agency (IEA), reaching national climate goals requires adding or refurbishing a total of more than 80 million kilometres of power grids by 2040, the equivalent of the entire existing global grid and the European Union estimates that Europe will need to invest EUR 584bn to upgrade its power grids this decade. 

To satisfy this growing demand from power grid customers, NKT has acquired SolidAl. The acquisition is supporting NKT’s growth strategy and will:

“SolidAl provides a strong strategic fit in terms of capacity and competence, strengthening NKT’s position in serving customers with end-to-end grid solutions, particularly the growing demand for medium- and high-voltage power cables up to 225 kV. We look forward to welcoming SolidAl’s highly skilled employees to NKT and continuing our growth journey together. With more than 50 years in the industry, SolidAl will complement the competitiveness of the product mix from NKT’s existing factories in Asnaes, Velke Mezirici and Cologne focusing on delivering the full range of power cables for the grid at a larger scale,” says Claes Westerlind, President and CEO of NKT.

“NKT’s acquisition of SolidAl is a testament to our team’s dedication and hard work. NKT is a widely recognized worldwide leader in the manufacturing of power cables and accessories, and I could not think of a better owner to support SolidAl in expanding its commercial reach and technical capabilities,” says François Moufflet, CEO, SolidAl.

Adding an established production footprint in Southern Europe will enhance NKT’s geographical footprint and reach in selected key markets. SolidAl’s strong presence in France, UK, Ireland, Spain, and Portugal expands NKT into new markets and strengthens its existing foothold in others.

In 2023, SolidAl had revenue (in market prices) of approximately EUR 150m and generated an EBITDA of approximately EUR 20m. NKT has acquired SolidAl for a total enterprise value of EUR 192m, corresponding to an EV/EBITDA multiple of 9.4x. NKT has identified recurring synergies which will gradually contribute to an improved financial performance starting in 2025 and are expected to be fully realized by end 2026. Including synergies, the acquisition of SolidAl corresponds to an EV/EBITDA multiple of 7.0x.

As part of the acquisition, NKT will invest an additional EUR 50m to expand the medium- and high-voltage capacity at the existing site. The new production capacity is anticipated to be operational in 2027. The acquisition, including the investment, is expected to support NKT’s medium-term financial ambitions including delivering RoCE above 20%.

The transaction is unconditional, and closing is effective as of today. The acquisition was funded within the existing capital structure. NKT remains committed to a conservative capital structure with leverage ratio up to 0.0x catering for the investment programs ongoing and enabling the high-voltage projects.

SolidAl is expected to contribute to NKT’s financial performance from the date of closing. The contribution is expected to be in line with 2023 and will come in addition to NKT’s 2024 financial outlook announced in company announcement no. 3 of 21 February 2024, which remains unchanged.

Teleconference NKT A/S hosts a teleconference for investors and financial analysts at 12:00 pm CEST on 21 June 2024. The presentation to be used during the call will be available before the start of the teleconference. To attend, please register and access on investors.nkt.com