Note 30. Acquisition and divestment of operations, discontinued operations and assets held for sale

The acquisitions and divestments of business combinations executed in 2018 and 2017 are set out below. Annual revenue and number of employees reflect the situation at the date of the respective transaction.

Business area

Company

Acquisition date

Annual revenue

No. of employees

Sandvik Mining and Rock Technlology

Inrock

2 July 2018

46 MUSD in 2017

70

Sandvik Machining Solutions

Metrologic group

4 July 2018

43 MEUR in 2017

170

Sandvik Materials Technology

Custom Electric Manufacturing

1 August 2018

5 MUSD in 2017

20

Sandvik Machining Solutions

Dura-Mill

3 December 2018

7 MUSD in 2017

30

There were no acquisitions carried out during 2017.

Total fair value of assets and liabilities of acquired businesses in 2018

The fair value of acquired assets and assessed liabilities has been preliminary established for the acquisitions of Metrologic, Inrock and Dura-Mill due to the ongoing analysis of the acquired surplus values. Only minor IFRS adjustments were made to the acquisition values.

Fair value recognized in the Group

Metrologic

Inrock

Other

Total

Intangible assets

1,463

51

1,514

Property, plant and equipment

29

84

1

114

Inventories

7

65

8

80

Current receivables

282

172

5

459

Cash and cash equivalents

314

314

Provisions

–10

–10

Interest-bearing liabilities

–2

–5

–7

Non-interest-bearing liabilities

–2,147

–325

–3

–2,475

Net identifiable assets and liabilities

–64

–9

62

–11

Surplus values

1,966

681

146

2,793

Purchase consideration

–1,902

–672

–208

–2,782

Cash and cash equivalents in acquired businesses

314

314

Repayment of loans

–1,924

–171

–2,095

Transaction expenses

–68

0

–68

Net cash outflow

–3,580

–843

–208

–4,631

Contributions from companies acquired in 2018 by business area

 

Sandvik Machining Solutions

Sandvik Mining and Rock Technology

Sandvik Materials Technology

Total

Contributions as of acquisition date

 

 

 

 

Revenue

238

163

19

420

Profit/loss for the year

93

25

3

121

 

 

 

 

 

Contributions if the acquisition date would have been 1 January 2018

 

 

 

 

Revenue

451

313

42

806

Profit/loss for the year

184

34

9

227

Discontinued operations

The Mining Systems business was divested to FLSmidth and NEPEAN during 2017. Consequently, order intake and revenues in the quarter relate to small bookings of parts and service to already ongoing projects. The operating loss amounted to –262 million SEK (–95), adversely impacted by primarily high costs in completion of the remaining ongoing projects. Change in currency rates has adversively impacted the finance net by –3 million SEK.

Mining Systems has been reported as discontinued operations and the divested businesses has as of 2 November 2017 been deconsolidated from Sandvik’s financial statements. The projects to be finalized during 2019 by Sandvik, through an operational agreement with FLSmidth, will be reported as discontinued operations.

Assets held for sale

On 17 May 2017, Sandvik announced Sandvik Materials Technology’s intention to divest its welding and stainless wire operations. These businesses are subject to intense competition and Sandvik Materials Technology does not hold a leading market position. In connection with the ongoing divestment, an impairment of fixed assets, amounting to 450 million SEK was exercised in 2017.

These businesses were reported as assets held for sale in Sandvik consolidated financial statements as from the second quarter of 2017 and until the second quarter of 2018 when the businesses were divested.

On 8 December 2017, Sandvik announced that it has signed an agreement to divest Hyperion to the US listed investment firm KKR. Hyperion was a separate product area within Other Operations, offering products and solutions based on hard and super-hard materials. The Hyperion business was divested in the third quarter of 2018.

Income statement for discontinued operations

 

2017

2018

Revenue

3,080

852

Cost of sales and services

–2,851

–1,174

Gross profit

229

–322

Selling expenses

–102

–42

Administrative expenses

–210

–110

Research and development costs

–15

–6

Other operating income

49

12

Other operating expenses

–12

–84

Operating loss

–61

–552

Financial income

9

7

Financial expenses

Net financing costs

9

7

Loss after financial items

–52

–545

Income tax

Loss for the year

–52

–545

Assets and liabilities included in divestments

 

Other Operations

SMT

Total

Intangible assets

1,077

6

1,083

Property, plant and equipment

897

109

1,006

Financial assets

200

200

Deferred tax assets

31

31

Inventories

961

228

1,189

Current receivables

780

81

861

Cash and cash equivalents

80

10

90

Provisions

–6

–1

–7

Interest-bearing liabilities

–453

–180

–633

Non-interest-bearing liabilities

–884

–48

–932

 

 

 

 

Gain on divestments of business combinations

 

 

879

 

 

 

 

Consideration received after divestment costs

 

 

3,769

Loan repayment

 

 

373

Less: Cash and cash equivalents in the divested entities

 

 

–90

Impact on the Group’s cash and cash equivalents, divested operations

 

 

4,052

Assets and liabilities held for sale

 

2017

2018

Intangible assets

1,016

Property, plant and equipment

823

26

Financial assets

79

4

Current assets

2,604

611

Total assets

4,522

641

Provisions

438

4

Interest-bearing liabilities

9

Non-interest-bearing liabilities

1,123

608

Total liabilities

1,570

612

Cash flow statement for discontinued operations

 

2017

2018

Cash flow from operating activities

–466

–439

Cash flow from investing activities

–144

2

Cash flow from financing activities

2

–2

Cash flow from discontinued activities

–608

–439

Divestments

In July 2018, Sandvik divested the Hyperion business, within Other operations, to the US-listed investment firm KKR at the price of 4 billion SEK on a debt- and cash-free basis. In 2017 the business recorded revenues of about 3.2 billion SEK with approximately 1,400 employees.

During 2018, Sandvik Materials Technology divested its holding in the associated company Fagersta stainless and the businesses within Stainless and Welding Wire. The considerations amounted to 475 million SEK during 2018. The transactions involved some 260 employees.