Lacroix Increases Equity Stake in Firstronic

Firstronic has signed an exclusive agreement with Lacroix which increases Lacroix’s equity stake from 12.5 percent to 62 percent.
 
Subject to the usual conditions precedent, this transaction will be carried out in co-investment with Bpifrance, which will take a 26 percent stake in Firstronic through its International Build-Up Fund.
 
The current management team will remain in place. John Sammut, who has helmed Firstronic since 2011, will remain Firstronic’s CEO and retain a 4 percent stake in the company, while Jochen Lipp, COO since 2013, will take a 3 percent stake in the company.
 
“We could not be happier with this agreement. We are very familiar with Lacroix teams, and Lacroix and Firstronic are joining forces to create a global leader in EMS, which makes perfect sense from both an industrial and financial point of view. I am excited for us to start working together to solidify the excellent growth opportunities that lie ahead,” said Sammut.
 
“We have had a stake in Firstronic for almost four years now, during which time we have been able to observe the commitment and know-how of Firstronic’s teams and the strong potential synergies between our respective entities. Together with keeping in place a highly experienced management team, which has been able to grow the business at a rapid pace, these elements convinced us that a combination would be mutually beneficial. Proud of the opportunities afforded by a first acquisition such as this on US soil that is as structural as it is historic, we look forward to welcoming Firstronic’s teams within the Group and with them, creating a global leader in industrial IoT solutions and electronic devices for critical applications,” said Vincent Bedouin, Lacroix CEO.
 
Lacroix has made international development one of the pillars of its Leadership 2025 plan, with the objective of strengthening its presence, particularly through acquisitions, in the strategic markets of the United States and Germany. Its involvement with Firstronic began in 2017 when the Group purchased a minority stake and subsequently increased to 12.5 percent, prior to this current transaction.
 
Founded in 1980, Firstronic is an electronics manufacturing services (EMS) provider serving customers in the automotive, industrial and healthcare sectors in North America. With approximately 1,300 employees, the company has two production sites in Michigan and Mexico.
 
The acquisition of FIrstronic strengthens Lacroix’s global position in sectors that are increasingly demanding electronic solutions. It is also extremely relevant from both an operational and financial point of view, as it is in line with the Group’s strategic ambition to establish a strong industrial base in North America and complete an industrial network with a multi-continent reach. It also creates a solid foundation for accelerating the development of Lacroix’s various activities within the USMCA region.
 
As Firstronic and Lacroix complement each other in terms of customers and respective locations, the combination of Lacroix and Firstronic aims to create a global leader in EMS. The synergies of this pairing include achievement of the critical size enabling cross selling and supporting major customers in Europe and North America with an optimal number of manufacturing facilities, geographical diversification for both companies and a very strong potential for economies of scale in purchasing activities and service delivery.
 
The operational relevance of the combination is complemented by a particularly attractive financial profile. Under the leadership of John Sammut, Firstronic has been generating double-digit sales growth over the last few years, together with significantly increased margins. Strong growth is expected across both indicators for the 2021 financial year with a trajectory of $140 million in revenue and EBITDA above 9 percent, with a forecast for over $200 million in revenue for 2022.
 
Beyond the identified commercial and industrial synergies and economies of scale, which led to the initial acquisition of a stake in 2017, the integration of Firstronic should immediately prove accretive within the upcoming financial year, especially in terms of EBITDA margin. Finally, the establishment of an industrial base in the US dollar region should also provide the Group with a natural hedge against exchange rate variations.
 
The transaction remains subject to the usual conditions precedent. Nevertheless, in the absence of any need for approval by the competition authorities, Lacroix expects the transaction to be completed before the end of the year.
 
Following this transaction, Lacroix intends to pursue its roadmap with new acquisitions to strengthen each of its international activities.