Target Company Overview

Wema Group Holding AS, founded in 1986 and headquartered in Bergen, Norway, is the leading provider of diesel and AdBlue level sensors, and increasingly, AdBlue quality sensors within the global heavy vehicle market. The company boasts a commanding market position with long-standing relationships with major international heavy vehicle manufacturers. Employing over 300 people worldwide, Wema has established subsidiaries in key markets, including Switzerland, the USA, China, Brazil, and Thailand, demonstrating its global reach and commitment to quality and innovation.

Norvestor V, L.P. invested in Wema in 2008 during a period of substantial growth for the company. Despite facing challenges due to the financial crisis in 2009, Norvestor actively supported Wema in developing new customer relationships, expanding their product range, and enhancing their distribution network, particularly in the US, Northeast Asia, and South America. By diversifying its markets, Wema successfully transformed into a truly global enterprise.

Industry Overview in Norway

The heavy vehicle market in Norway, while smaller than in other regions, is characterized by its strong emphasis on quality and sustainability. The demand for efficient fuel management systems has increased, driven by environmental regulations and the need for reduced emissions. As a result, companies like Wema that specialize in high-performance sensors are well-positioned to capitalize on this growing trend.

Additionally, Norway's commitment to green technology and sustainable practices has paved the way for innovation within the industry. The government has consistently supported initiatives that encourage the use of cleaner fuel technologies, which has indirectly contributed to the demand for advanced sensor technologies like those provided by Wema.

Furthermore, with the rise of electrification and hybrid vehicles, the industry is experiencing a paradigm shift. This transition presents both challenges and opportunities, as companies must innovate to stay relevant in an evolving marketplace. Wema's focus on research and development places it at the forefront of this transformation.

Despite global economic fluctuations, the Norwegian heavy vehicle market has demonstrated resilience. Strong export opportunities exist, especially with established connections to Asian and American markets, positioning Wema for future growth as global demand increases.

Rationale Behind the Deal

The sale of Wema System AS to Measurement Specialties Inc. for approximately USD 114.5 million reflects the successful transformation and strategic global expansion of Wema Group Holding AS. The decision to divest comes after a period of significant revenue growth, with 2013 revenues reaching NOK 588 million, more than quadrupling since Norvestor's investment. By selling to a US-listed company, Wema aims to leverage its new parent’s resources and expertise to further enhance its global market presence.

Norvestor's support throughout challenging market conditions helped Wema emerge as a more robust organization, paving the way for this strategic acquisition. The transaction underscores the value created through Norvestor's investment and Wema's dedicated efforts toward international expansion and product innovation.

Investor Information

Norvestor Equity AS is a prominent private equity firm focused on lower mid-market buyouts in the Nordic region. Known for its robust and experienced team, which has been working together since 1991, Norvestor has executed 53 investments and participated in over 192 add-on acquisitions and divestitures. The firm specializes in identifying growth opportunities for companies, making platform investments primarily in the Norwegian and Swedish mid-markets, while also exploring avenues for expansion into new markets.

Through its investment in Wema, Norvestor demonstrated its commitment to fostering strong businesses capable of achieving market leadership. The firm’s experience in supporting companies during periods of growth and transformation has enabled it to build a diverse portfolio that encompasses a range of industries, securing a solid position in the private equity landscape.

View of Dealert

The recent acquisition of Wema Group Holding AS by Measurement Specialties Inc. is likely a positive investment move for both parties involved. For Wema, becoming part of a larger, publicly traded entity provides the opportunity for additional resources, increased market exposure, and enhanced distribution capabilities that could accelerate further growth. The backing of MEAS can facilitate Wema’s strategic objectives in expanding its global footprint and product offerings.

From an investor's perspective, Norvestor's decision to divest Wema at this time reflects the valuation created over the years and the potential for significant returns. The company's robust growth trajectory in emerging markets and steady demand for its products bolster its attractiveness as an investment.

Furthermore, Wema's adaptability in navigating challenges, coupled with a strong focus on innovation and customer relationships, positions it well for sustained growth. Investors can be optimistic about the future, given the firm's initiatives to capture market opportunities across different geographies.

In conclusion, this acquisition can be seen as a strategic alignment that offers numerous synergies and growth opportunities, making it a commendable transaction for both Wema and Measurement Specialties Inc.

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