Nilfisk-Advance has entered into an agreement to acquire the Viper Group ("Viper"). Based in Dongguan in southern China, Viper is a leading Chinese manufacturer and supplier of professional cleaning equipment. The acquisition will give Nilfisk-Advance a leading position in the rapidly growing Chinese market and provide a platform for accelerated access to new markets.
The acquisition of Viper Group is conditional upon the Chinese authorities approving the sale of Viper’s Chinese companies. We expect the transaction to be finalized in the course of the coming months.
The transaction includes acquisition of three Asian companies (Dongguan Viper Cleaning Equipment Company Limited, Viper Cleaning Equipment (Shanghai) Limited and Viper (Hong Kong) Company Limited), along with acquisition of the business and assets of the separate US company, Viper Industrial Products LLC.
With the anticipated takeover of Viper, Nilfisk-Advance will be able to supplement its existing production platform in China, and - through Viper’s well-established sales organisation - gain access to an additional network of sales channels and customers principally in the United States and China.
A well-run company with around 600 employees, Viper is expecting revenue of around 25 mUSD in 2007. Viper is a 25-year-old, private-owned company with a product programme comprising vacuum cleaners, floor washers, wet/dry vacuum cleaners, floor polishers and carpet cleaning equipment. This programme principally addresses the commercial cleaning market (i.e. contract cleaning companies) with products in the mid-price range.
Viper has headquarters and production in Dongguan, southern China, a number of Chinese regional sales offices managed from Shanghai, and a sales and distribution centre based in Hong Kong. In North America, Viper consists of separate sales company in the state of Michigan.
Read about Viper at www.viperind.com
Element of expansion strategy
The Viper acquisition is an element in our expansion strategy, and represents an attractive supplement to the strong underlying organic growth rate of Nilfisk-Advance, amounting to 7% annually in recent years. The transaction will provide Nilfisk-Advance with an enlarged platform for positioning itself in the fast-growing Chinese market and for increasing utilisation of its existing sales network.
The principal synergy attached to the Viper acquisition lies in the potential for creation of growth in existing and future markets. Nilfisk-Advance will be able to utilize its global sales network to market Viper products in existing markets, and at the same time Viper’s mid-price products will be well-suited for paving the way in new markets - such as in Asia, Eastern Europe and South America.
Sales of Viper products are expected to triple over a five-year period, while at the same time cost synergies are realised.
Further, Viper’s vertically-integrated low-cost production setup can be utilised also in conjunction with Nilfisk-Advance’s existing production.
There is expected to be no need to implement rationalisation and efficiency measures in contexts other than possibly procurement and administration.
Viper’s current Chief Executive, Simon Chen, will continue to be responsible for the company management, the future plan being to operate Viper as a separate entity in the Nilfisk-Advance Group.
The combined Nilfisk-Advance and Viper organization will be represented through production and sales subsidiaries in 36 countries. There will also be an extensive network of dealers covering most of the world.
Nilfisk-Advance and Viper together represent annual overall revenue of around 800 mEUR (6 bnDKK). The combined organization will contain some 4,500 people (3,900 at Nilfisk-Advance and 600 at Viper).