20. Company Mergers
Teco Srl and Teco Inc. (“Teco”)
On February 29, 2024, NORMA Group acquired all shares in Teco Srl, based in Italy, and in its subsidiary Teco Inc., based in the United States.
Teco specializes in irrigation products for gardening, landscaping and agriculture. Teco, which is based in Trani in Puglia, has some 20 years of experience in product development and the distribution of micro-irrigation solutions. The company supplies around 800 products, including drippers, sprayers, valves and joining elements. Its customers are wholesalers and manufacturers of water management systems. In the 2023 fiscal year, Teco generated sales of around EUR 4.8 million.
The US site functions as a warehouse to meet demand in the US market quickly and efficiently.
The acquisition of Teco represents an important step for NORMA Group to further drive growth in the Water Management area in Europe.
The acquisition resulted in goodwill of EUR 3,189 thousand, which includes the expansion of the market position, the expertise of the employees and expected synergies.
The goodwill recognized is not expected to be deductible for tax purposes.
The table below summarizes the amounts of the assets acquired and liabilities assumed at the acquisition date.
The consideration of EUR 9,400 thousand was paid in cash.
Purchase price allocation Teco | T051 |
|---|---|
in EUR thousand | |
Consideration as of February 29, 2024 | 9,400 |
Valuation of acquired assets and liabilities | |
Cash and cash equivalents | 354 |
Property, plant and equipment | 1,323 |
Brands | 818 |
Customer relationships | 4,107 |
Other intangible assets | 10 |
Inventories | 2,119 |
Trade accounts receivable and other receivables | 1,207 |
Other non-financial assets | 43 |
Income tax receivables | 715 |
Trade accounts payable and other liabilities | -683 |
Other personnel-related liabilities | -162 |
Other non-financial liabilities | -468 |
Other loans | -1,483 |
Other financial liabilities | -93 |
Income tax liabilities | -273 |
Deferred income tax liabilities | -1,323 |
Total identifiable net assets | 6,211 |
Goodwill | 3,189 |
Intangible assets were identified as the main assets in the purchase price allocation. Customer relationships were measured using the “multi-period excess earnings method” and recognized at a value of EUR 4,107 thousand. The brand was measured using the “relief from royalty method” and recognized at a value of EUR 818 thousand.
Trade receivables include gross amounts due totalling EUR 1,219 thousand, of which EUR 12 thousand was written off.
Liabilities of EUR 4,489 thousand were acquired, of which EUR 1,483 thousand are loan liabilities.
The revenue generated by Teco reported in the Consolidated Statement of Comprehensive Income has amounted to EUR 1,154 thousand since February 29, 2024 (date of acquisition). Teco contributed EUR 6 thousand to adjusted net profit during this period (the result reported does not include the step-up effects from the purchase price allocation of Teco).
If Teco had already been part of the scope of consolidation as of January 1, 2024, revenue attributable to Teco in the amount of EUR 1,978 thousand would have been reported in the Consolidated Statement of Comprehensive Income. Furthermore, Teco would have contributed EUR 183 thousand to adjusted net profit (the result reported does not include the step-up effects from the purchase price allocation of Teco).
Legend
These contents are part of the Non-financial Group Report and were subject to a separate limited assurance examination.