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The market and the Finnish analyst community liked the news on Monday that Harvia had acquired Kirami. Harvia stock (FI4000306873) reached an ATH of €49.6 with active trading and the analyst consensus target was raised to €52.

My target in my article last week was already at the €55 level. The acquisition of Kirami is similar to Almost Heaven Saunas, Harvia already had a co-operation deal in place with Kirami over the last two years with its FinSauna concept providing wood heaters to Kirami Saunas. The transaction will increase Harvia’s topline in my opinion by at least €20 million in the year 2021.

Another great acquisition – this time from Finland

Harvia on 28 May 2021 signed and closed an agreement to acquire Kirami Oy, a leading Finnish still water hot tub manufacturer and pioneer in wood-heated hot tubs globally. The acquisition complements Harvia’s sauna and spa offering well and strengthens Harvia’s leading position as a global sauna and spa experience brand. Kirami also owns 50% of an Estonian production company Metagroupp OÜ and 51% of a sales company Kirami Sweden AB, the shares of which are included in the transaction as well.


History of Kirami

Kirami is a family business that was established in 2001 by its current owners and has grown to be one of the largest makers of still water hot tubs globally. The company’s main product is wood-heated still water hot tubs. Kirami’s offering also includes hot tub accessories, water sanitation products, and outdoor saunas, as well as other products for outdoor living. Kirami has grown rapidly in recent years, its revenue totaling €16 million in fiscal year ended September 2020, with approximately 42% of the sales coming from exports to Central Europe and Scandinavia. The company has a production facility in Finland in Sastamala and a sales office in Turku, employing approximately 40 people in total. In addition, Kirami employs a seasonal workforce in production and logistics during April–August. In 2020, the total number of employees during the high season was approximately 60.

Purchase was paid with cash from Harvia’s current operations cash flow no new debt

The purchase price is €7 million at closing and on top of this, a delayed purchase price of up to €4 million after a three year period based on Kirami’s EBITDA development. Harvia will finance the acquisition with cash funds.

Synergies are great for both companies

The acquisition is expected to create annual synergies of around one million euros, which are expected to be realised in full by the end of 2023. The identified key sources of synergy comprise distribution, sourcing and logistics, and R&D. One-off integration and post-closing costs are estimated to total €0.4 million over the years 2021 and 2022.

“The company is an excellent strategic fit to Harvia’s ‘healing with heat’ philosophy, supporting our aim of increasing the value of average purchase, geographical expansion, and improving our productivity. Hot tubs are a new product category for Harvia, and they complement our modern backyard living & wellness offering very well, fully in line with our Healing with Heat concept,” said Tapio Pajuharju, CEO of Harvia Plc.

The acquisition of Kirami increases Harvia’s market share especially in the residential sauna and spa solutions. Utilizing Harvia’s existing distribution channels and network, Pajuharju says he sees great opportunities to further increase the sales of Kirami products especially in Central Europe and Scandinavia.

“In the future, we see additional opportunities particularly in expanding the hot tub offering to electrically heated or hybrid still water hot tubs,” he added. “Combining Harvia’s electrical and water technology expertise with Kirami’s hot tub products and unique expertise provides an additional competitive advantage. Lately, hot-cold alteration treatments have become very popular and Kirami is offering a good platform to further entertain this opportunity,.”

Strategic rationale of the acquisition

The acquisition of Kirami implements Harvia’s growth strategy and complements Harvia’s residential sauna and spa solutions offering. Saunas and hot tubs have natural cross-selling opportunities as well as the advantage of offering an entire wellness experience. The acquisition also supports Harvia’s leading market position in the global sauna and spa market.

Transaction structure

The sellers in the transaction are the owners CEO Mika Rantanen and CFO/CIO Eero Rantanen, owning a total of 88% of Kirami Oy, and the minority shareholders, owning 12% of the company. After the transaction, Harvia owns 100% of Kirami Oy. Kirami’s operations will continue as is, and management and personnel will carry out their tasks without changes. The top management of Kirami Oy is committed to working for the company at least for the next three years to ensure continued product and business development. Kirami will continue as an independent brand like previous acquisitions of Harvia Group: EOS Group (Germany) 2020, Almost Heaven Saunas (USA) 2018 and Sentiotec (Austria) 2016.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Raine Lahtinen

Raine Lahtinen

Raine Lahtinen has spent over 25 years in wealth management and trading. His active investment days started when he attended University of Miami 1987-1991 majoring in International Finance and Marketing. He has experienced the highs and lows of the stock markets since the 1987 crash, Dot.com bubble 2001-2002, the 2008 financial crisis and the current record breaking rally.

Since 1995, Raine has been based in Brussels, Belgium in Continental Europe as an international financial advisor and director of investments in various UK IFA firms. He has written many popular columns about markets and investments during his professional life. His passion is finding undervalued listed stocks. As a Finnish native he specializes on Nordic and US stocks.

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