Translation: Original published in Finnish on 4/30/2025 at 8:36 am EEST.

With the acquisition of Team Verksted Holding AS, Relais expands its geographical coverage of repair and maintenance services and increases its wholesale activities in Norway. This platform acquisition will provide the basis and conditions to continue to reallocate capital in the Norwegian market in line with the company's strategy. Reflecting this and the seemingly moderate valuation of the acquisition, we are positive on the arrangement and believe it has good value creation potential.

Repair and maintenance services and wholesale from Norway

Relais announced on Tuesday that it has signed an agreement to acquire 100% of the shares in the Norwegian Team Verksted Holding AS. Team Verksted Holding consists of the commercial vehicle repair and maintenance chain Team Verksted and the heavy spare parts specialist wholesaler Lastvagnsdelar. Team Verksted operates a nationwide multibrand workshop chain, offering maintenance and service for trucks, trailers, and buses. Team Verksted has 21 own and 3 franchise workshops across Norway. Lastvagnsdelar distributes spare parts and accessories for the heavy vehicle sector, specifically for trucks, buses, and trailers in Norway.

According to Relais, the key benefits of the acquisition are the expanded ability to provide repair and maintenance services to fleet customers and transport operators in the Nordic region through the growth of its workshop network, the significant synergies (up to 2.5 MEUR per year) that will be enabled, the potential for Team Verkstad to serve as a Norwegian platform for further acquisitions in the commercial vehicle repair and maintenance business and, through Lastvagnsdelar, an expanded value chain position and a new channel for the distribution of the group's own brands.

Latest numbers look good, acquisition has good value creation potential

The revenues of the acquired entity for the years 2023-2024 has been approximately 63 MEUR and 71 MEUR, respectively. The EBITDA margins according to local accounting standards (i.e. excluding the IFRS 16 effect) for the corresponding years have been 1.9 MEUR (3.1% of revenue) and 4.9 MEUR (7% of revenue). The EBITA result for the corresponding years has been 3.3 and 6.3 MEUR. The EBITA profitability for 2023 corresponds to a negative margin of 5.3%, while last year's profitability was, in our view, at a good level of 8.9%.

Under the agreement, Relais will pay 400 MNOK or approximately 34 MEUR, excluding lease liabilities, for TVH. According to our calculations, this corresponds to EV/EBITDA multiples of 17x and 7x and EV/EBITA multiples of 10x and 5x, respectively, on the basis of previous years' results. Thus, the valuation is high at the 2023 earnings level, while it falls to a low level at the 2024 earnings level. Taking into account the synergy potential of the acquisition, Relais's historical track record of strengthening the profitability of its repair and maintenance businesses (e.g. Raskone) and the profitability level of its current similar workshop operations, we believe in the company's ability to develop the acquired entity and operate it at a good profitability level. Against this backdrop, we consider the valuation of the transaction to be moderate and believe that it has value creation potential.

Financing arranged with debt, deal expected to close soon

Relais will finance the acquisition with cash, which will be paid from a bridge financing facility with a tenor of up to 18 months, provided by Relais's main bank. We estimate that the company's debt capacity allows for this amount of additional debt, although the company also stated that it plans to partially or in full refinance the bridge financing facility with equity-like or equity capital market financing. The closing of the acquisition is estimated to take place in June 2025, subject to Norwegian competition authority approval of the transaction and provided that certain other customary conditions for the closing of the acquisition are met.

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