G31 Business combinations

The acquisitions of business combinations executed in 2021 and 2022 are set out below. Annual revenue and number of employees reflect the latest available information at the time of the transaction.

Acquisitions

All above acquisitions during 2022 were made through the purchase of 100 percent of shares and voting rights or through the purchase of the net assets of the acquired operations. Sandvik received control over the operations upon the date of closing the acquisition. No equity instruments have been issued in connection with the acquisitions. All acquisitions have been accounted for using the acquisition method.

The amounts presented in the following tables detail the recognized amounts aggregated by business area. The relative amounts of the individual acquisitions are not considered significant except for the Deswik, SP Mining, Frezite and Sphinx Tools businesses which are disclosed separately. Sandvik is in the process of reviewing the final values for certain of the recently acquired businesses. No adjustments are expected to be material.

Total fair value of assets and liabilities of acquired businesses in 2022

The fair value of acquired assets and assessed liabilities has been preliminarily established for all acquisitions made during 2022. Only minor IFRS adjustments were made to the acquisition values.

Acquisitions made by Sandvik Mining and Rock Solutions

In April, Sandvik Mining and Rock Solutions acquired the Australian-based Deswik, the leading and fastest growing major provider of mine planning software. Deswik will be part of a newly formed division Digital Mining Technologies. By acquiring Deswik, Sandvik gains a top-tier supplier of integrated software platforms that support digitalization throughout mine planning stages, with more than 10,000 current licenses. Deswik will fill a value chain gap in Sandvik Mining and Rock Solutions’ offering, increasing upstream mining coverage and enabling opportunities for end-to-end optimization solutions, including, for example, incorporating electrification at the mine planning stage. Its core software suite includes computer-aided 3D mine design, scheduling, operations planning, mining data management and geological mapping. Deswik also offers a range of consultancy services, including mine planning, scoping, software implementation and training support.

Deswik, established in 2008, with headquarter in Brisbane, has approximately 300 employees and operates 14 offices in 10 countries. The company has demonstrated strong and profitable growth over the past decade in the large and growing mining software market. Goodwill of SEK 4,702 million and other surplus values of SEK 1,745 million was recorded on the purchase. Impact on earnings per share (excluding non-cash amortization effects from business combinations) will be positive.

Acquisitions made by Sandvik Rock Processing Solutions

On October 31, Sandvik acquired the mining related business of Schenck Process Group (SP Mining). SP Mining is one of the market leaders in screening, feeding, screening media and train loading solutions in the industry. The company will be reported in Stationary Crushing and Screening, a division in Sandvik Rock Processing Solutions (SRP). SP Mining is a global provider of high-capacity screening solutions, highly complementary to Sandvik’s offering, and has a strong aftermarket business which includes application support, screen refurbishment, product engineering design and manufacturing and digital support services. It has approximately 630 employees and its main R&D and production sites are located in Australia, with additional production units in South Africa, Brazil and China.

During 2022, SP Mining contributed with revenues amounting to SEK 373 million and with an EBITA margin accretive to Sandvik Rock Processing Solutions’ margin. Strong synergies are expected to drive revenue growth of mid to high single digits above market growth. EV/EBITDA multiple including expected five year run-rate synergies is approximately 10x. Goodwill of SEK 4,475 million and other surplus values of SEK 2,490 million were recorded on the purchase. Impact on Sandvik’s earnings per share will initially be neutral.

Acquisitions made by Sandvik Manufacturing and Machining Solutions

On September 1, Sandvik acquired the Portugal-based company Frezite. Frezite’s offering primarily consists of made-to-order polycrystalline diamond (PCD) tools for metal and wood applications, with exposure to the automotive, general engineering and aerospace segments. The company is reported within Walter, a division within Sandvik Manufacturing and Machining Solutions (SMM).

In 2021, the company had revenues of approximately SEK 450 million and an EBITA margin that is slightly dilutive to SMM. Impact on Sandvik’s earnings per share will be limited, yet positive. Goodwill of SEK 427 million and other surplus values of SEK 307 million was recorded on the purchase.

On August 8, Sandvik acquired 100 percent of the equity interests in the Switzerland-based Sphinx Tools Ltd and its wholly owned subsidiary P. Rieger Werkzeugfabrik AG (“Sphinx Tools”).

Sphinx Tools’ offering primarily consists of precision solid round tools (micro tools) and surgical cutting tools. The customers are mainly within the automotive, aerospace and medical segments. The company is reported within Sandvik Coromant, a division within SMM. Sphinx Tools enhances Sandvik Coromant’s product offering within solid round tools and is an established player in the adjacent surgical cutting tools market. The company is present in Europe with three production sites in Switzerland and has global distribution.

Sphinx Tools was founded in 1994, has around 115 employees and is based in Switzerland. In 2021, the company generated revenues of approximately SEK 292 million. The EBITA margin is neutral to SMM. Impact on Sandvik’s earnings per share will be limited, yet slightly positive. Goodwill of SEK 625 million and other surplus values of SEK 157 million was recorded on the purchase.

The fair value of the acquisitions made during 2021 have changed due to the establishment of a final purchase price allocation during 2022.