2.1 Acquisitions
On January 5, 2024, Rieter Holding Ltd. (Winterthur, Switzerland) acquired 100 percent of the shares of Petit Spare Parts SAS (Aubenas, France). This entity is active in the business of spare parts for textile machines and employs ten full-time employees. The purchase price amounted to CHF 1.4 million. The acquired net assets primarily consist of inventories. No goodwill resulted from the acquisition.
On November 1, 2024, Rieter Holding Ltd. (Winterthur, Switzerland) acquired 11 percent of the shares of Prosino S.r.l. (Borgosesia, Italy), and therefore increased its investment to 60 percent. This entity is active in the business of manufacturing rings for spinning machines and had been a previous supplier of Rieter. Prosino S.r.l. employs 90 full-time employees. With the acquisition of Prosino S.r.l., Rieter has strengthened its portfolio of high-quality ring components, particularly spinning and twisting rings, which will be allocated to the Components segment.
Further 10 percent of the shares will be bought on January 1, 2025, and an additional 10 percent on January 1, 2026, at the same valuation as the initial transaction in 2024. For the remaining 20 percent of the shares, Rieter Holding Ltd. has a call option effective from January 1, 2027, while the seller is granted a put option effective from January 1, 2028. The exercise prices for the call respectively put option are based on an EBITDA multiple including a cap and a floor. The redemption amount for this part of the financial liability has been determined considering these clauses. The maximum amount to be paid is EUR 4.4 million (CHF 4.1 million).
Under the anticipated-acquisition method the contract is accounted for as if the forwards (purchase obligations of 10 percent on January 1, 2025, and 10 percent on January 1, 2026) had been satisfied by the non-controlling shareholders and the put option (effective from January 1, 2028) had been exercised already. Accordingly, Rieter does not recognize a non-controlling interest in the consolidated financial statements and accounts for the business combination as if it had acquired 100 percent interest. The respective forward and put liabilities for the remaining shareholding of 40 percent have been recognized as financial liabilities in the consolidated balance sheet.
The purchase price of the shares amounted to EUR 2.2 million (CHF 2.1 million) and was settled against cash. The transaction resulted in goodwill of CHF 5.0 million. The goodwill is attributable to the acquired workforce and the complementary nature of the acquired businesses. It is not deductible for tax purposes. The acquired business contributed sales of CHF 1.4 million and a net result of CHF -0.1 million to the Group for the period from November 1 to December 31, 2024. If the acquisition had occurred on January 1, 2024, consolidated pro-forma sales and the net result for the year ended December 31, 2024, would have been CHF 866.3 million and CHF 12.1 million, respectively. These amounts were calculated from the results of the business, adjusted by the differences in the accounting policies between Rieter and Prosino S.r.l., and from the additional depreciation and amortization that would have been charged assuming the fair value adjustments to inventories, property, plant, and equipment, and intangible assets had applied from January 1, 2024, together with the consequential tax effects.
The following table presents a breakdown of assets acquired and liabilities assumed at November 1, 2024:
CHF million | Notes | Prosino S.r.l. |
|---|---|---|
Cash and cash equivalents | 4.6 | |
Trade receivables | 0.9 | |
Other current receivables | 1.1 | |
Inventories | 4.4 | |
Property, plant, and equipment | 8.6 | |
Intangible assets | 2.2 | |
Other non-current assets | 1.4 | |
Assets | 23.2 | |
Trade payables | 2.0 | |
Other current liabilities | 3.5 | |
Advance payments from customers | 0.1 | |
Non-current financial debt | 2.8 | |
Deferred income tax liabilities | 0.6 | |
Other non-current liabilities | 0.3 | |
Non-current provisions | 0.5 | |
Liabilities | 9.8 | |
Fair value of pre-existing interest in voting rights (49%) | 9.2 | |
Consideration paid in cash (11%) | 2.1 | |
Forward and put liabilities (40%) | 7.1 | |
Total consideration (51%) | 9.2 | |
Fair value of net identifiable assets acquired | 13.4 | |
Goodwill | 5.0 |
Intangible assets identified comprise the value of customer relationships (CHF 1.3 million), and the related brands and trademarks (CHF 0.9 million). The fair value of acquired trade receivables amounted to CHF 0.9 million. The gross contractual amount of invoiced trade receivables was CHF 1.0 million, with a respective allowance of CHF 0.1 million recognized at the acquisition date.
Transaction costs of CHF 0.1 million relating directly to the acquisition were recognized in the income statement as other expenses. The accounting for the acquisitions is preliminary due to the ongoing identification and separation of related assets and liabilities.