NOBIA - AN OPERATIONAL TURN-AROUND AND INDUSTRY CONSOLIDATION INVESTMENT
Background
IK acquired Nobia from the Swedish forestry group Stora AB in September 1996. At that time Nobia was a loss-making manufacturer of kitchens, doors and windows, as well as a wholesaler of building products. The company was focusing on the Nordic region.
The Opportunity
IK viewed Nobia as a classic business turnaround case. Although the company was making heavy losses prior to the buyout, it had good market positions in each of its chosen sectors and the potential to match the higher margins of its competitors. IK also believed that, in terms of external factors, notably the economy, the construction cycle could not get much worse.
The Outcome
Following the buyout, a comprehensive restructuring programme was initiated in cooperation with Nobia’s management team. The production process and headcount was adapted to the current level of demand and the flexibility of the organisation was increased. The organisation was changed from being based on market divisions to being based on product divisions. Acquisitions and mergers were pursued within the three main divisions in order to strengthen market positions and to capture profits from economies of scale.
By 1999 all divisions had been turned into profitable businesses. Thereafter Nobia commenced a consolidation programme in the kitchen industry and the businesses within the doors, windows and wholesale divisions were successfully divested.
Since 1999, Nobia has been a successful consolidator in the European kitchen industry through the acquisitions of the Poggenpohl Group (Germany), Norema (Norway) and Invita (Denmark) in 2000, Magnet (UK) in 2001 and Gower (UK) in 2003. These acquisitions have provided Nobia with strong market positions not only in the Nordic region, but also in the UK and in Germany. Furthermore, they have enabled Nobia to realise significant synergies through the streamlining and co-ordination of purchasing and production.
With opportunities to profit from a further consolidation of the kitchen industry, the listing on the Stockholm Exchange in June 2002 was a natural next step in Nobia’s development. The company now capitalises on its position as the clear market leader and consolidator of the fragmented European kitchen industry, and benefits from synergies arising from the combination of original and acquired businesses.
The Industri Kapital 1994 Fund sold its remaining stake of Nobia shares in February 2004. The Nobia investment was one of IK's most successful holdings to date, generating a multiple of close to 8 times the original cost to fund investors.
