LONDON (Reuters) - Private equity firm Nordic Capital has agreed to sell electric wheelchair maker Permobil to Swedish investment firm Investor AB <INVTEb.ST> in a deal worth 655 million euros (£557.2 million).
The Nordic region, where Sweden is a hub for the private equity industry, is expected to see a pick-up in buyout activity as a stronger economic outlook underpins higher valuations for sellers and dispels some of the uncertainty that sidelined buyers in the second half of last year.
Nordic acquired Permobil, which operates in 30 countries building custom-made wheelchairs for rehabilitation patients, in 2006 and the company has nearly doubled its sales since.
In 2012 it generated revenue of around 1,600 million crowns ($246.3 million) and had earnings before interest, tax, depreciation and amortisation (EBITDA) of 350 million crowns.
The company's annual sales growth over the past decade has averaged 8 percent, Investor said.
"It has a strong product offering, leading market positions, good profitability and solid cash flow generation. This combination offers an attractive platform for future profitable growth," said Borje Ekholm, President and Chief Executive of Investor.
Nordic said the deal gave Permobil an enterprise value of 5,500 million crowns, of which 5,100 million crowns would be paid in cash and 400 million crowns was subject to the company's future performance.
In order for that earn-out to be paid, Permobil's average EBITA during 2013-2015 must exceed its current level by at least 25 percent, Investor said in a statement.
Investor said it would inject 3.5 billion crowns in equity financing, with the rest of the deal to be financed by external debt and equity participation by management.
A source familiar with the matter said the sale represented a return of 5 times for Nordic.
($1 = 0.7777 euros)
($1 = 6.4970 Swedish crowns)
(Reporting by Kylie MacLellan; Editing by Louise Heavens)