Relevant GRI Indicators
G31 Business combinations
The acquisitions of business combinations executed in 2020 and 2021 are set out below. Annual revenue and number of employees reflect the latest known information at the date of the respective transaction.
Business area |
Cash Generating Unit |
Company/Unit |
Country |
Acquisition date |
Annual revenue |
No. of employees |
||||
|---|---|---|---|---|---|---|---|---|---|---|
2020 |
|
|
|
|
|
|
||||
Sandvik Materials Technology |
Sandvik Materials Technology |
Summerill Tube Corporation |
USA |
January 14, 2020 |
100 MSEK in 2018 |
45 |
||||
Sandvik Manufacturing and Machining Solutions |
Seco Tools |
Quimmico Centro Technológico (QCT) |
Mexico |
June 1, 2020 |
90 MSEK in 2019 |
130 |
||||
Sandvik Mining and Rock Technology |
Sandvik Rock Processing Solutions |
Allied Construction Partners LLC |
USA |
October 2, 2020 |
29 MUSD in 2019 |
38 |
||||
Sandvik Manufacturing and Machining Solutions |
Dormer Pramet |
Miranda Tools |
India |
December 23, 2020 |
200 MSEK in 2019 |
580 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Coromant |
CGTech |
USA |
December 31, 2020 |
470 MSEK in 2019 |
180 |
||||
|
|
|
|
|
|
|
||||
2021 |
|
|
|
|
|
|
||||
Sandvik Mining and Rock Solutions |
Sandvik Mining and Rock Solutions |
DSI Underground1) |
Germany |
July 7, 2021 |
596 MEUR in 2020 |
2000 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Coromant |
Chuzhou Yongpu Carbide Tools Co., Ltd2) |
China |
July 31, 2021 |
400 MSEK 12M Q220–Q121 |
500 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Manufacturing and Machining Solutions |
CNC Software Inc. |
USA |
September 29, 2021 |
60 MUSD in 2020 |
220 |
||||
Sandvik Mining and Rock Solutions |
Sandvik Mining and Rock Solutions |
Tricon |
Australia |
October 1, 2021 |
18 MAUD 12M Q319–Q220 |
24 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Manufacturing and Machining Solutions |
DWFritz Automation Inc. |
USA |
October 1, 2021 |
720 MSEK in 2020 |
560 |
||||
Sandvik Materials Technology |
Sandvik Materials Technology |
Accuratech Group |
Switzerland |
October 4, 2021 |
75 MSEK in 2020 |
50 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Manufacturing and Machining Solutions |
Cambrio |
USA |
October 15, 2021 |
628 MSEK in 2020 |
375 |
||||
Sandvik Manufacturing and Machining Solutions |
Seco Tools |
Fabryka Narzędzi FANAR S.A. |
Poland |
November 2, 2021 |
175 MSEK in 2020 |
230 |
||||
Sandvik Rock Processing Solutions |
Sandvik Rock Processing Solutions |
Kwatani |
South Africa |
December 9, 2021 |
175 MSEK in 2020 |
150 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Coromant |
ICAM Technologies Corporation |
Canada |
December 23, 2021 |
30 MSEK in 2020 |
27 |
||||
Sandvik Manufacturing and Machining Solutions |
Walter |
GWS Tool Group |
USA |
December 23, 2021 |
41 MUSD in 2020 |
490 |
||||
Sandvik Manufacturing and Machining Solutions |
Sandvik Manufacturing and Machining Solutions |
Dimensional Control Systems |
USA |
December 27, 2021 |
92 MSEK in 2020 |
70 |
||||
|
||||||||||
Acquisitions
All acquisitions above 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, except for the acquisition of Chuzhou Yongpu Carbide Tools Co., Ltd that was made through the purchase of 67 percent of shares and voting rights with a call/put option to buy/sell the remaining part in three years’ time. For information about the accounting treatment of the call/put option see note G21. 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 DSI Underground, CNC Software Inc., DWFritz Automation Inc. and Cambrio 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 2021
The fair value of acquired assets and assessed liabilities has been preliminarily established for all acquisitions made during 2021. Only minor IFRS adjustments were made to the acquisition values.
|
SMR |
SRP |
SMM |
SMT |
Total |
|---|---|---|---|---|---|
Intangible assets |
57 |
0 |
32 |
1 |
91 |
Property, plant and equipment |
740 |
3 |
809 |
25 |
1,577 |
Other non-current assets |
452 |
13 |
101 |
26 |
592 |
Inventories |
1,042 |
32 |
672 |
25 |
1,771 |
Receivables |
1,445 |
45 |
955 |
24 |
2,468 |
Other current assets |
52 |
1 |
78 |
– |
131 |
Cash and cash equivalents |
386 |
67 |
690 |
5 |
1,148 |
Interest-bearing loans and borrowings |
–2,542 |
–73 |
–2,053 |
–122 |
–4,790 |
Other liabilities and provisions |
–1,424 |
–52 |
–1,598 |
–21 |
–3,095 |
Deferred tax assets/liabilities, net |
–525 |
–5 |
–522 |
–4 |
–1,056 |
Net identifiable assets and liabilities |
–316 |
32 |
–836 |
–43 |
–1,163 |
Goodwill and surplus values, net |
8,521 |
105 |
17,509 |
108 |
26,244 |
Non-controlling interests |
–7 |
– |
– |
– |
–7 |
External liability to minority shareholders |
– |
– |
–323 |
– |
–323 |
Purchase consideration |
–8,198 |
–138 |
–16,625 |
–65 |
–25,026 |
Deferred consideration |
49 |
26 |
218 |
– |
293 |
Cash and cash equivalents in the acquired business |
386 |
67 |
690 |
5 |
1,148 |
Net cash outflow |
–7,763 |
–44 |
–15,718 |
–60 |
–23,585 |
Acquisitions made by Sandvik Mining and Rock Solutions
In July, Sandvik Mining and Rock Solutions (SMR) acquired DSI Underground, the global leader in ground support and reinforcement products, systems and solutions for the underground mining and tunneling industries. The acquisition is an important step in Sandvik´s growth ambition. DSI Underground’s track record of driving progress and safety in underground operations and its global reach will further strengthen Sandvik´s world-leading market position within mining and rock solutions. DSI Underground is present in 70 countries, with 22 production units situated close to end customers. The acquisition included DSI’s ownership stake in four joint ventures (Rocbolt Technologies) based in China, South Africa, Mongolia and Australia.
In August, Sandvik Mining and Rock Solutions acquired the share of Rocbolt Technologies’ joint ventures in China, South Africa and Mongolia from the joint venture partner (Jennmar). Jennmar will continue to be a joint venture partner in Australia. Transaction expenses for the whole acquisition amounted to SEK 33 million. Goodwill of SEK 6,344 million and other surplus values of SEK 2,038 million were recorded on the purchase. The deal had a slightly positive impact on earnings per share. Goodwill is not deductible for tax purposes.
|
Total SMR |
Whereof DSI |
|---|---|---|
Intangible assets |
57 |
57 |
Property, plant and equipment |
740 |
737 |
Other non-current assets |
452 |
447 |
Inventories |
1,042 |
1,007 |
Receivables |
1,445 |
1,424 |
Other current assets |
52 |
52 |
Cash and cash equivalents |
386 |
371 |
Interest-bearing loans and borrowings |
–2,542 |
–2,534 |
Other liabilities and provisions |
–1,424 |
–1,403 |
Deferred tax assets/liabilities, net |
–525 |
–511 |
Net identifiable assets and liabilities |
–316 |
–352 |
Goodwill and surplus values, net |
8,521 |
8,382 |
Non-controlling interests |
–7 |
–7 |
Purchase consideration |
–8,198 |
–8,022 |
Deferred consideration |
49 |
– |
Cash and cash equivalents in the acquired business |
386 |
371 |
Net cash outflow |
–7,763 |
–7,651 |
Acquisitions made by Sandvik Rock Processing Solutions
Sandvik Rock Processing Solutions (SRP) had no major acquisitions during 2021.
Acquisitions made by Sandvik Manufacturing and Machining Solutions
In September, the Design & Planning Automation division within Sandvik Manufacturing and Machining Solutions (SMM) acquired US-based CNC Software Inc., a leading provider of CAD/CAM software solutions for manufacturing industries and the company behind Mastercam, the most widely used Computer Aided Manufacturing (CAM) brand in the industry. By acquiring CNC Software, Sandvik gains a world-class CAM brand in the Mastercam software suite with an installed base of around 270,000 licenses/users, the largest in the industry, as well as a strong market reseller network and well-established partnerships with leading machine makers and tooling companies. This is in line with Sandvik´s strategic focus to grow in the digital manufacturing space, with special attention on industrial software close to component manufacturing. The acquisition of CNC Software and the Mastercam portfolio, in combination with Sandvik´s existing offerings and extensive manufacturing capabilities, will make Sandvik a leader in the overall CAM market measured in installed base. The deal is slightly negative to Sandvik’s earnings per share from the start. Transaction expenses amounted to SEK 26 million. Goodwill of SEK 3,175 million and other surplus values of SEK 1,813 million were recorded on the purchase. Goodwill is deductible for tax purposes.
In October, the Metrology division within Sandvik Manufacturing and Machining Solutions (SMM) acquired US-based DWFritz Automation Inc., a leading global provider of precision metrology, inspection and assembly solutions for advanced manufacturing. DWFritz Automation designs, builds and supports engineer-to-order high-speed, non-contact metrology solutions and automation systems. With DWFritz Automation, Sandvik expands its current metrology offering and takes a leading position in in-line metrology, including a broader position in high-speed, high-volume, non-contact inspection and assembly automation. The Impact on Sandvik’s earnings per share is initially neutral. Transaction expenses amounted to SEK 38 million. Goodwill of SEK 755 million and other surplus values of SEK 296 million was recorded on the purchase. Goodwill is deductible for tax purposes. the DWFritz Automation Inc. acquisition includes a contingent consideration clause and the fair value of the contingent consideration has been calculated based on a discount rate of 16.7 percent.
In October, the Design & Planning Automation division within Sandvik Manufacturing and Machining Solutions (SMM) acquired US-based Cambrio, a leading company with an end-to-end portfolio in CAD/CAM software for manufacturing industries like automotive, transportation, energy, medical and aerospace. By acquiring Cambrio, Sandvik will establish an important position in the CAM market that includes both toolmaking and general-purpose machining. This will complement the existing customer offering in Sandvik Manufacturing Solutions. Cambrio’s product portfolio includes GibbsCAM for production milling, turning, and mill turn operations, Cimatron for mold and die, as well as SigmaNEST for sheet metal fabrication. The Impact on Sandvik’s earnings per share is initially neutral. Transaction expenses amounted to SEK 83 million. Goodwill of SEK 5,120 million and other surplus values of SEK 1,840 million was recorded on the purchase. Goodwill is not deductible for tax purposes.
|
SMM total |
Whereof CNC Software Inc. |
Whereof DWFritz Automation Inc. |
Whereof Cambrio |
|---|---|---|---|---|
Intangible assets |
32 |
0 |
13 |
0 |
Property, plant and equipment |
809 |
2 |
119 |
7 |
Other non-current assets |
101 |
– |
71 |
28 |
Inventories |
672 |
– |
116 |
2 |
Receivables |
955 |
69 |
188 |
179 |
Other current assets |
78 |
12 |
16 |
26 |
Cash and cash equivalents |
690 |
89 |
167 |
267 |
Interest bearing loans and borrowings |
–2,053 |
–1 |
–243 |
–797 |
Other liabilities and provisions |
–1,598 |
–242 |
–331 |
–330 |
Deferred tax assets/liabilities, net |
–522 |
– |
– |
–478 |
Net identifiable assets and liabilities |
–836 |
–70 |
116 |
–1,095 |
Goodwill and surplus values |
17,509 |
4,988 |
1,051 |
6,960 |
External liability to minority shareholders |
–323 |
– |
– |
– |
Purchase consideration |
–16,625 |
–4,918 |
–1,167 |
–5,865 |
Deferred consideration |
218 |
– |
209 |
– |
Cash and cash equivalents in the acquired business |
690 |
89 |
167 |
267 |
Net cash outflow |
–15,718 |
–4,828 |
–791 |
–5,598 |
Acquisitions made by Sandvik Materials Technology
Sandvik Materials Technology (SMT) had no major acquisitions during 2021.
|
SRP |
SMM |
SMT |
Total |
|---|---|---|---|---|
Contributions as of acquisition date |
|
|
|
|
Revenues |
50 |
25 |
79 |
154 |
Profit (loss) for the year |
–2 |
–9 |
3 |
–8 |
|
|
|
|
|
Contributions if the acquisition date would have been January 1 |
|
|
|
|
Revenues |
227 |
523 |
79 |
829 |
Profit (loss) for the year |
–1 |
4 |
3 |
6 |
|
Total SMR |
Whereof DSI |
SRP |
Total SMM |
Whereof CNC Software |
Whereof DWFritz Automation Inc. |
Whereof Cambrio |
SMT |
Total |
|---|---|---|---|---|---|---|---|---|---|
Contributions as of acquisition date |
|
|
|
|
|
|
|
|
|
Revenues |
3,678 |
3,650 |
6 |
776 |
161 |
202 |
151 |
25 |
4,485 |
Profit (loss) for the year |
103 |
98 |
–1 |
27 |
22 |
–38 |
22 |
–3 |
127 |
|
|
|
|
|
|
|
|
|
|
Contributions if the acquisition date would have been January 1 |
|
|
|
|
|
|
|
|
|
Revenues |
7,194 |
7,148 |
191 |
3,709 |
571 |
888 |
666 |
107 |
11,201 |
Profit (loss) for the year |
100 |
79 |
22 |
270 |
78 |
–91 |
57 |
7 |
399 |
|
SRP |
SMM |
SMT |
Total |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
2021 |
Change |
2020 |
2021 |
Change |
2020 |
2021 |
Change |
2020 |
2021 |
Change |
Intangible assets |
– |
– |
– |
390 |
391 |
1 |
36 |
36 |
– |
426 |
427 |
1 |
Property, plant and equipment |
9 |
9 |
– |
96 |
96 |
– |
24 |
24 |
– |
129 |
129 |
– |
Other non-current assets |
2 |
2 |
– |
25 |
26 |
– |
– |
– |
– |
27 |
28 |
1 |
Inventories |
52 |
52 |
– |
39 |
40 |
1 |
39 |
39 |
– |
130 |
131 |
1 |
Receivables |
26 |
27 |
1 |
146 |
141 |
–5 |
17 |
17 |
– |
189 |
185 |
–4 |
Other current assets |
1 |
1 |
– |
22 |
17 |
–5 |
– |
– |
– |
23 |
18 |
–5 |
Cash and cash equivalents |
5 |
5 |
– |
70 |
72 |
2 |
– |
– |
– |
75 |
77 |
2 |
Interest-bearing loans and borrowings |
–2 |
–2 |
– |
–16 |
–21 |
–5 |
– |
– |
– |
–18 |
–23 |
–5 |
Other liabilities and provisions |
–11 |
–11 |
– |
–150 |
–138 |
12 |
–26 |
–26 |
– |
–187 |
–175 |
12 |
Deferred tax assets/liabilities, net |
2 |
2 |
– |
–192 |
1 |
193 |
– |
– |
– |
–190 |
3 |
193 |
Net identifiable assets and liabilities |
84 |
85 |
1 |
430 |
625 |
194 |
90 |
90 |
– |
604 |
800 |
196 |
Goodwill and surplus values |
20 |
20 |
0 |
2,793 |
2,592 |
–201 |
– |
– |
– |
2,813 |
2,612 |
–201 |
Purchase consideration |
–104 |
–105 |
–1 |
–3,223 |
–3,217 |
7 |
–90 |
–90 |
0 |
–3,417 |
–3,412 |
5 |
Cash and cash equivalents in the acquired business |
5 |
5 |
– |
70 |
72 |
2 |
– |
– |
– |
75 |
77 |
2 |
Net cash outflow |
–99 |
–100 |
–1 |
–3,153 |
–3,145 |
9 |
–90 |
–90 |
0 |
–3,342 |
–3,335 |
7 |
The fair value of the acquisitions made during 2020 have changed due to the establishment of a final purchase price agreement during 2021.
Accounting principles
Subsidiaries are entities over which the Parent Company has a controlling influence. Controlling influence exists if the Parent Company has the power over the investee, meaning the investor has existing rights that give it the ability to direct the relevant activities, is exposed to or has the rights to variable return from its involvement in the investee and can, through its influence, affect the return from the involvement in the investee. In assessing a controlling interest, defacto control, potential voting rights that are currently exercisable or convertible are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that the controlling influence commences until the date that control ceases. For cases in which the subsidiary’s accounting policies do not coincide with the Group’s accounting policies, adjustments were made to comply with the Group’s accounting policies.
The consolidated financial statements are prepared in accordance with the purchase method. In business combinations, acquired assets and assumed liabilities are identified and classified, and measured at fair value on the date of acquisition (also known as a purchase price allocation).
Transaction costs in conjunction with acquisitions are directly in profit or loss for the year as other operating expenses.
Contingent considerations are recognized as financial liabilities and at fair value on the acquisition date. Contingent considerations are remeasured at each reporting period with any change recognized in profit or loss for the year.
In step acquisitions, when a controlling interest is achieved, any net assets acquired earlier in the acquired units are remeasured at fair value and the result of the remeasurement is recognized in profit or loss. If the controlling interest is lost upon divestment, net profit is recognized in profit or loss. Any residual holding in the divested business is then measured at fair value on the date of divestment and its effect is recognized in profit or loss for the year.
Critical estimates and judgments
The business areas use estimates and judgments regarding allocation of goodwill and other surplus values in a business combination.