Hexagon sounds out buyers as shares soar 12%
Swedish industrial group has made 100 acquisitions since 2000
Hexagon, a Swedish industrial group that has tried to remake itself through a series of software acquisitions, is sounding out buyers about a potential sale as its market value shot up to $16.7bn on Wednesday.
The company has been working with advisers at Goldman Sachs and HSBC to gauge interest from larger industrial rivals such as ABB, Schneider Electric, Siemens and GE, according to two people close to the discussions.
Stockholm-based Hexagon is in the midst of a period of turmoil: its chief executive Ola Rollen has been charged in Norway with insider trading and its largest shareholder Melker Schorling was forced to step down as chairman for health reasons. Mr Rollen has denied wrongdoing.
Despite the trouble, the company’s share price has recovered steadily over the past several months from a steep drop in October when Mr Rollen was charged. Bankers have been working with the company for at least a few weeks to field interest. GS and HSBC declined to comment.
Shares in the company soared 12 per cent to a record-high of SKr423 in late morning Stockholm trading.
Hexagon said in a statement that it “evaluates various opportunities to optimise the company’s positioning and shareholder value. Should these evaluations lead to concrete results, the market will be immediately informed”. The statement followed a Wall Street Journal report about the sale efforts late on Tuesday.
The company, largely unknown outside Sweden, has been built up by Mr Rollen, still chief executive, and Mr Schorling, who owns 22.6 per cent of its shares.
Over the past 15 years, the duo used a poorly performing conglomerate that did everything from run day care centres to import fish to make more than 100 acquisitions and build one of the largest industrial technology groups in the Nordics.
Along the way Hexagon took control of Leica Geosystems and Brown & Sharpe, becoming a leader in technology used to design, measure and position objects.
Hexagon’s enterprise value to free cash flow ratio is 20 times — far ahead of what rival industrial groups are valued at, according to analysts. They said the company had convinced investors that it should be valued as an information technology business.
Some critics of the company have questioned the way the company calculates the gains from its dealmaking spree, although the company has defended its accounting. Nearly 4 per cent of Hexagon shares are held by investors who are betting that its price will fall.
“This has been a stock which has very much divided the market . . . The current valuation of Hexagon might prove challenging to any acquirer too,” analysts at Olivetree Financial wrote. They added: “It appears there is a changing of the guard, and it is very possible that Schorling’s children have seen this as an opportune time to exit at such a lofty valuation.”
When Mr Rollen was charged in October, his lawyer said in a statement that the allegations were connected to the purchase of shares in Next Biometrics by Greenbridge Partners, a private equity firm founded and managed by Mr Rollen. “Ola Rollen firmly denies the accusations. He does not admit to any guilt,” his lawyers said.