Saab buying Kockums for SEK340 million

Kockums A26 design for next generation Swedish submarine

JUNE 29, 2014 — Saab announced on Friday that it has entered into an agreement with ThyssenKrupp Industrial Solutions AG regarding the acquisition of ThyssenKrupp Marine Systems AB (TKMS AB, formerly Kockums). The purchase price is SEK 340 million (about $50 million). The news came just one day after Saab had said that talks were “still ongoing.”

“We are looking forward to welcoming Kockums and its personnel to Saab. This acquisition marks the start of a new era in Kockum’s notable history. The knowledge that the employees possess for developing and producing submarines is unique and strengthens all of Saab”, says Saab’s President and CEO Håkan Buskhe.

“Integration and development efforts will now begin to ensure that operations reach their full capacity. It is important to achieve synergies with Saab’s current naval business. This process must be allowed to take its course, but at the same time we begin deliveries of development, maintenance and production work to the Swedish market,” says Gunilla Fransson, Head of Business Area Security and Defense Solutions.

Saab said that the acquisition is in line with its ambition to increase its capabilities in the naval domain and strengthensits status as a comprehensive supplier of military systems.

In April 2014, Saab and ThyssenKrupp Industrial Solutions AG signed a non-binding Memorandum of Understanding regarding the acquisition of the Swedish shipyard TKMS AB with operations based in Karlskrona, Malmö and Muskö, Sweden. The parties have now agreed that Saab will acquire TKMS AB.

The purchase price is SEK 340. million. Existing funds will be used to finance the acquisition. The transaction’s effect on Saab’s result for 2014 is estimated to be non-material. TKMS AB will be integrated into Saab’s business area Security and Defense Solutions.

TKMS AB designs, builds and maintains naval systems such as submarines and surface vessels. Other successful products include air independent propulsion (AIP) systems based on Stirling technology, submarine rescue vehicles and mine counter measures systems. The company has approximately 900 employees and supplies systems and products to the navies of Sweden, Australia and Singapore. During the financial year 2012/2013, TKMS AB reported sales of approximately SEK 1.7 billion (2011/2012: SEK 1.9 billion) and income from operations of approximately  SEK 34 million (2011/2012: SEK 13 million).

The transaction is subject to approval by the board and the supervisory bodies of ThyssenKrupp Group and the Swedish Competition Authority. These approvals are expected during July 2014.

ThyssenKrupp said that the Swedish shipyard had, over the years, incurred significant losses and that the sale followed the public expression of the Swedish government’s wishes to carry out naval shipbuilding programs nationally.

ThyssenKrupp says it is concentrating its naval shipbuilding activities in Kiel, Hamburg and Emden, Germany, and that these activities are very profitable and provide a reliable contribution to earnings of the company. It said that with its proprietary, air-independent HDW fuel cell propulsion ThyssenKrupp Marine Systems  “is the clear global leader in the field of non-nuclear submarines.”