Lectra to buy Gerber Technologies

Feb 9, 2021 | Hot Topics

This is big: Lectra has announced that it plans to acquire Gerber Technology for “an upfront payment of 175 million euros – through a combination of cash and debt – plus 5 million newly issued Lectra shares to … Gerber Technology’s sole shareholder”. As I understand it, the total deal value is roughly €300 million based on Lectra’s closing share price on February 5, 2021. For those keeping track, Lectra says Gerber had revenue of 165 million euros in 2020, so this is a surprisingly low revenue multiple.

Gerber makes PLM solutions for the fashion, automotive, and furniture industries while Lectra helps companies in those same industries design, manufacture, and market their products. Lectra reported revenue of €280 million in 2019.

Why do this? Lectra says the joint entity would be “a premier advanced technology partner, able to quickly meet changing customer needs and deliver even more value through seamlessly integrated solutions. Together, the two companies will have a large installed base of product development software and automated cutting solutions in operation, with a worldwide presence and a long list of prestigious customers … [This deal comes] at an opportune time for both companies and their customers. The current uncertain economic climate and unprecedented challenges that fashion, automotive and furniture companies are facing due to the COVID-19 pandemic make it more important than ever for them to transform, digitalize and optimize their operations.”

Lectra expects the transaction to be accretive (meaning generating revenue and profits) from 2022.

Lectra releases its 2020 results tomorrow, February 10, 2021, and may offer more insights during its analyst event on February 11, 2021. Unfortunately, I think that’s in French –I would love to know how that valuation came about …